BMO is launching a gold deposit program for its customers, through its BMO Nesbitt Burns investment subsidiary, allowing customers to purchase and hold physical gold.

The offering gives clients the option to purchase gold and either have it delivered directly “to their front door” or held in a custodian account operated by BMO Nesbitt Burns at an approved third-party storage.

“In these volatile times, having the ability to access and hold physical gold on deposit through BMO Nesbitt Burns’ custody account is an option investors may find appealing. Our program is designed to provide system-wide, secure and easy access,” said Simon Carling, managing director, BMO Capital Markets.

Purchases can be made from any of the firm’s investment advisors and are denominated in Canadian dollar, with daily liquidity and physical withdrawal and delivery options. There an no annual storage fees or management expense ratios, and the minimum purchase is one ounce. However, withdrawal and delivery fees can be levied by the bank.

All the gold in the program is fully allocated and physical, according to Carling, and there will be no financial gold certificates, derivatives, exchange-traded products, gold stocks or other gold-linked securities used.

Gold's stunning performance in recent years has been partly due to concerns over the value of fiat money and instability in the financial system. Yesterday, as markets were hammered everywhere over fears about the eurozone and growth in the US and Western Europe, gold retrenched but then bounced back somewhat. After a volatile day, it ended over 2 per cent down. Meanwhile, the MSCI AC World Index lost 4.49 per cent. Gold remains around 33 per cent up over a one-year period, according to Kitco.

Alan Harter, managing director of Pactolus Wealth Management, recently told Family Wealth Report that more and more countries are recognizing gold as an alternative currency. Meanwhile, figures from the World Gold Council show that during the second quarter, worldwide central banks' purchases more than quadrupled compared to the same period in 2010.

“Central banks are likely to remain net purchasers of gold. Purchases of 69.4 tonnes during Q2 2011 demonstrated that central banks are continuing to turn to gold to diversify their reserves,” the organization said.