Canada's Gold Reserve Dilemma: Only G7 Nation Without Gold
Canada, despite being the fourth-largest gold producer globally, is the only G7 nation without gold in its reserves. The Bank of Canada has raised concerns about this absence, given the shifting global financial landscape.
Canada's gold reserves dwindled significantly, halving by 1985 and being completely sold off by 2016. The Bank of Canada has conducted studies suggesting a review of the country's official reserves may be necessary. This comes as 73% of central bankers expect a decrease in dollar-denominated assets in global reserves in the next five years.
Gold represents 27% of global reserves, more than US Treasury bonds at 23%. Central banks are diversifying their reserves to protect against potential loss of access to dollar-denominated reserves and erosion of purchasing power. Several central banks, including China, are accumulating gold reserves despite the rising gold price. At current prices, 1,000 tonnes of gold would be worth 165 billion CAD, exceeding Canada's current international reserves of 172 billion.
The Bank of Canada has historically relied on other assets and monetary policy tools instead of holding gold directly. However, with global trends shifting and the value of gold increasing, Canada's lack of gold reserves may warrant reconsideration.
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