As demand for gold continues to climb, Wealthsimple is launching a new tool to give its customers a chance to cash in on the surging precious metal.
On Wednesday, the Toronto-based brokerage announced that it is now allowing its clients to trade real gold with as little at $1.
The move is part of a broader strategy to diversify its investment offerings while making different investment products more accessible to consumers, Paul Teshima, Wealthsimple’s chief commercial officer, told the Star.
“We want to allow all Canadians access to these things that people use to build wealth,” said Teshima.
Wealthsimple is letting traders buy and sell gold 24/7 for a one per cent fee per transaction, according to a product briefing. It will not charge them extra commission fees.
The company said it is working with custodians to store physical gold on behalf of clients at no cost, with the option of home delivery. Clients can redeem the gold once they buy one-tenth of an ounce, valued at around $560 currently.
“If you put a dollar a day, or five, ten dollars a week,” said Teshima, “over time you could accumulate enough that you could then redeem a one-tenth ounce gold coin.”
Wealthsimple already carries Exchange Traded Funds (ETFs) — investment funds that pool different stocks together — that track the price of gold. But Teshima said this new financial product will enable investors to buy gold directly without the ETF fees.
More investors have been buying up gold to protect themselves against inflation and economic downturns, given that the yellow metal tends to preserve its value over time.
Many have been worried about the impact of recent political developments on the economy, including the U.S. government shutdown. There are also concerns around the independence of the Federal Reserve, which could affect inflation, as U.S. president Donald Trump is threatening to interfere with the central bank’s governance.
As a result, the price of gold reached record highs recently, surpassing $6,000 per ounce on Monday and rising more than 60 per cent in a year, according to goldprice.org.
Wealthsimple has been working to carve out a larger space in the Canadian banking industry despite the dominance of the Big Six banks. The fintech became known for its low fees and hip branding that resonates with younger Canadians.
Also Wednesday, Wealthsimple announced it hit $100 billion in total assets under administration ahead of its original target of December 2028. Around a year ago, it was reported to have $50 billion in assets.
Among other new product launches, the company also teased its new “retirement accelerator” loan, meant for clients looking to maximize their Registered Retirement Savings Plan (RRSP) contributions.
The way these loans typically work is, borrowers use the money to top up their RRSP contributions. They can then claim an income deduction on their tax return for the amount contributed and use any tax refunds to help pay off the loan.
Wealthsimple is targeting Canadians who don’t have long credit histories and might not qualify for RRSP loans at other banks, said Teshima. Instead of requiring a credit check, Wealthsimple vets borrowers based on their assets.
“What we believe is that there are lots of Canadians today who are high earners but maybe haven’t developed lots of credit yet. You know, their credit score isn’t as good,” said Teshima.
“If you have 20,000 or 30,000 in a Tax-free Savings Account, we’re going to let you borrow some money to top up your RRSP against those assets and give you a much lower rate.”
Financial planners caution that borrowing to contribute to an RRSP account isn’t for everyone as there are risks associated with taking on debt.
Teshima said borrowers will work with advisors at the firm to determine whether the loan is a good fit for them.
“There are going to be some Canadians this does not make sense for because they literally are living paycheck to paycheck and they shouldn’t be doing this type of of loan,” he said.
“There’s some Canadians who have a little more money,” he went on, “and taking out this loan is going to work really well for them.”
