Many of you emailed me about the shocking headline that said Canada had sold off all of its gold reserves. Are we being ripped off? Will this hurt the Canadian dollar?
Headlines aside, this isn’t very big news because Canada had very little gold reserves. Most was sold off during the Mulroney and Chretien years. Justin Trudeau’s new government is just finishing the job.
The Canadian dollar hasn’t been backed by gold since the depths of the Great Depression. We left the gold standard in 1933, almost 40 years before the Americans abandoned it in 1971. Since then Canada has been a fiat currency, traders decide the value of the currency, not the amount of gold in federal vaults.
So while I’m saying there is no reason to panic because we had so little left any way, I do find this odd.
Canada is still a major gold producing nation, some rank us the fifth largest producer in the world and our mining expertise is exported to many other countries. We’re big players in gold and yet the government has no physical gold assets.
On November 4th, 2015, the day the Trudeau government was sworn in, the finance department’s international reserves report showed we had $110M US worth of gold. A month later it was $102M US. By January we were down to $58M, $24M in February and now nothing.
It is puzzling, and is something I’ll keep looking into.
Through the Harper years, there were no wild sell offs. There were ups and downs in the value of gold as the price went up and down but no wild sell offs. Now within four months of Trudeau taking office, all the gold is gone, sold off quickly and the question is why?
We don’t have all the answers…..yet.