Gold trading in RRSPs on the rise

It’s no secret that gold prices have been rising steadily over the past decade and Canadians have been increasingly attracted to the precious metal. Holdings of bullion in registered accounts are now on track to break records, according to one gold investment provider.

In 2007, discount online brokerage Questrade teamed up with Kitco Metals to provide access to physical bullion for registered accounts. The ensuring four years have seen the price of gold more than double, from $635/oz to $1,300.

“The price of gold has climbed steadily since we introduced gold bullion trading in 2007, and so has the gold trading activity of our clients,” says Edward Kholodenko, president and CEO of Questrade Inc.

The brokerage reports that gold trades grew 268% year-over-year between June 2009 and July 2010. Investor purchases of gold are held at the Royal Canadian Mint.

“Holding actual commodities in a registered plan is appealing for our clients,” says Kholodenko. “Not only can the investor avoid the management fees associated with funds, he or she will be able to take immediate advantage of market movement instead of waiting for a fund manager to invest on their behalf.”

The Questrade-Kitco partnership was the first offering for physical bullion for an RRSP. Prior to February 23, 2005, Canadians wanting exposure to gold had to resort to gold equities, funds and certificates.