Canada may be one of the largest gold producers in the world, but the federal government has completed a sell-off of nearly all of its gold reserves.
The latest data from the federal finance department shows Canada sold off 21,851 ounces of gold coins in February for roughly $35 million, leaving the official holdings of the precious metal at zero. The report noted the government still has 77 ounces left, valued at roughly $130,000.
Finance department spokesman David Barnabe said by e-mail that asset valuations are expressed in millions, so the value of the remaining gold was rounded to zero.
“Canada is gradually disposing of a small number of gold coins whose value is under US$500,000,” he said. “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.”
The Canadian government has been selling off its gold reserves since the mid-1960s, when over 1,000 tonnes were kept tucked away. Half of those reserves were sold by 1985, and then almost all the rest were sold through the 1990s up to 2002.
A previous disclosure from the Department of Finance showed Canadian gold reserves dropped to 0.62 tonnes.
Ian Lee, a professor at the Sprott School of Business at Carleton University in Ottawa, said while the decision to sell off the precious metal might upset some “gold bugs,” there is no reason to keep the reserves.
“I applaud Canada for doing so and any central bank because I think gold is an anachronism,” he said. “Gold is not legal currency, unless it is gold coin issued by the Royal Canadian Mint.”
While Canada has been shedding its reserves of the shiny stuff, other G7 countries have been holding on to their gold. The United States for example, has 8,133.5 tonnes of gold, according to the latest statistics from the World Gold Council. Germany has 3,381 tonnes while Italy has 2,451 and France 2,435 tonnes locked away in their vaults.
Following the Second World War, most industrialized countries pegged their currencies to gold. In 1971, Richard Nixon took the U.S. off the gold standard and now currently there is no country in the world with a currency tied to the price of gold.
Lee speculates that the U.S. and Germany are holding onto their gold for political reasons.
“The U.S. and the Germans are holding a lot of gold and aren’t selling it off simply because there are some real gold nuts in Congress,” he said, pointing specifically to Republican presidential contender Ted Cruz and former hopeful Rand Paul.
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