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Canada Has Sold All Its Gold

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Canada Has Sold All Its Gold
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At a time when central banks from China to Kazakhstan are regular buyers of gold, Canada has sold all its gold reserves. The 5th largest gold producer in the world and home to the world's largest gold mining company, Canada has sent the signal that it sees no investment value in something they're selling the rest of the world.

Following up on our story last month, it seems the Bank of Canada has completed its plans to totally divest itself of the nation's gold reserves. The central bank's March 3 report on Official International Reserves has zero for the amount of gold held. According to government data, the end for Canada's gold reserves came last month, when the last 21,929 troy ounces were sold.

canada gold reserves 1989-2016

This late incarnation of Canada's gold reserves began in 1935. At its peak in 1965, the vaults in Ottawa held 1,023 metric tons of bullion. By 1985, the amount was half that. The concerted effort to sell the Canadian gold reserves that ended last month actually began in 1989 (see chart.) By 2003 that 500 tonnes was down to only 3.4 tonnes, a volume which held until last year. From 2.99 tonnes in January 1, 2015, Canadian gold reserves were only 1.7 tonnes on January 1, 2016. That month, the Bank of Canada sold 1.02 tonnes, then finished selling off the last dregs in February. While the official number for Canadian gold reserves is zero, there's actually 77 troy oz left -- less than 2-1/2 kilograms.

Finance Department spokesman David Barnabe told reporters "The government has a long-standing policy of diversifying its portfolio by selling physical commodities (such as gold) and instead investing in financial assets that are easily tradable and that have deep markets of buyers and sellers."

gold-investigation

Keynesian professors applauded the move. Professor Ian Lee at the Sprott School of Business at Carleton University in Ottawa (ironically enough, named for famous physical precious metals investor Eric Sprott) told the Globe and Mail that “These days, gold has no legal purpose that is required under monetary policy. The gold story these days is about psychology and history. It’s not about central bank policy or economics any more. ”

Canada now has the dubious distinction of being the only G7 nation with no gold reserves at all.

G7-goldThe United States has the world's largest gold reserves. Germany is #2, Italy is #3, France is #4, Japan is #8, and the United Kingdom is #17.

The recent big rally in gold has to make one hope that Canada has not sold at the bottom of the market, making the same mistake Britain did in 1999.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product

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