Norbert’s Gambit: the cheap way Canadians buy US dollars

Every Canadian who buys US stocks pays a toll most never notice: the currency conversion. Brokers typically charge 1.5–2% on CAD→USD conversion, buried in the exchange rate rather than shown as a fee. On a $10,000 conversion that is up to $200 — every time, each direction. Norbert's Gambit is the standard workaround, and it is simpler than its name suggests.

The mechanics

The trick uses a security listed on both a Canadian and a US exchange in both currencies. The classic vehicle is DLR/DLR.U — a Horizons ETF that just holds US dollars, listed on the TSX in CAD (DLR) and in USD (DLR.U).

1. Buy DLR on the TSX with your Canadian dollars.
2. Ask your broker to journal the shares to DLR.U — same fund, same holding, now denominated in USD. Some brokers do this online, some need a phone call, some do it automatically when you sell the other listing.
3. Sell DLR.U — the proceeds are US dollars, converted at essentially the institutional exchange rate.

Total cost: two commissions plus a one-or-two-cent spread — typically $10–25 all in, versus $150–200 of hidden conversion fee on the same $10,000. The same trick runs in reverse (buy DLR.U, sell DLR) to come back to CAD. Dual-listed stocks like the big Canadian banks can also work, but a stock's price moves while you wait; DLR's does not, because it just holds cash.

The catches — real ones

1. Settlement time. The journaling can take one or two business days depending on the broker. During that window your money is in the fund, not available to deploy — a real cost if you are trying to catch a moving price.
2. Broker friction varies wildly. Some brokers make this a two-click routine; others require phone calls and manual journal requests. Know your broker's process before you need it.
3. Registered accounts. The gambit works in RRSPs and TFSAs at most major brokers, but rules differ — some do not allow USD sides in registered accounts at all.
4. Small conversions are not worth it. Under roughly $3,000–5,000, the two commissions and the hassle eat the savings. The broker's 2% on $1,000 is $20 — just pay it.

Broker friction is uneven enough that the only real prep is calling ahead: ask specifically whether DLR-to-DLR.U journaling is a self-serve click or a phone request, and how long it typically takes to settle. Five minutes on the phone before you need the conversion beats finding out mid-trade.

Why this belongs on this site

US positions are half of what we track — the Insider Tracker and Big Money cover US filings precisely because that is where Canadian investors' money increasingly goes. If you are going to cross the border, do not tip 2% at the door.

Opinion and personal record, not investment advice. Fee figures are typical ranges — check your broker's current schedule.