Introduction
Canada once held significant gold reserves, peaking at over 1000 tonnes in the mid 1960s. However, beginning in the late 1960s and with a formal policy in 1980, the government and Bank of Canada gradually sold all of these holdings. The last of its gold was sold in 2016, leaving Canada with zero official gold reserves – the only G7 country in this position. This report will highlight why the Bank of Canada, in contrast to most other central banks, holds no gold and is not pursuing any purchases of the metal.
Reasons For Selling Gold
The primary rationale for holding no gold has been to improve economic efficiency. Gold is a non-yielding asset that incurs storage, security, and insurance costs. In contrast, proceeds from gold sales were invested in liquid, interest-bearing assets such as U.S. Treasuries and other foreign currencies. The Bank of Canada felt that these assets better align with Canada’s reserve needs for liquidity and precautionary purposes. [1] In a 2019 speech, then-Deputy Governor Timothy Lane explained, “While these assets may not have the reassuring heft of a gold bar, we believe they are better suited to the purposes for which we hold reserves.” Canada’s flexible exchange rate and rare intervention needs (none since 1998 for the CAD) reduce the requirement for large, traditional reserves. Reserves serve primarily as insurance against extreme tail events, and interest-earning assets perform this role effectively while generating returns. [2]
This no-gold approach stemmed from the post-1971 shift after the end of the Bretton-Woods system (as I have discussed in a previous article) and the U.S. suspension of dollar-gold convertibility. Central banks, including Canada’s, moved away from gold as a core reserve asset toward fiat currencies as well as government securities, both viewed as more practical in a modern financial system. [1]
Contrast With Global Trends
Most other central banks around the world have maintained or increased gold holdings, particularly in recent years. Global central banks have made net purchases of hundreds of tonnes annually in the mid 2020s (i.e. 863 tonnes in 2025 via World Gold Council data), driven by diversification away from the U.S. dollar, hedging against inflation and geopolitical risks, as well as concerns over asset freezes (as seen with Russia). Gold is valued as a neutral, seizure-resistant store of value that performs well in crises. [3]
Emerging markets and countries seeking to reduce U.S. dollar dependence (i.e. China, India, Poland, Turkey) have been particularly active buyers. Gold has even surpassed U.S. Treasuries as a share of allocated gold reserves in some recent analyses. [4]
Canada’s strategy differs due to its stable institutions, strong credit rating, diversified economy, floating exchange rate, and access to swap lines with other central banks. Given these factors, officials of the Bank of Canada view the opportunity cost of holding non-yielding gold as unjustified. [2]
Assessment and Implications
At the time of its gold sales, the policy was seen as prudent and aligned with prevailing central banking consensus in advanced economies. Hindsight shows gold’s strong price appreciation (Canada’s historical gold holdings would be worth over 130 billion today), but the decision generated returns from interest-bearing assets over the decades and avoided storage expenses. [1]
Canada remains a major gold producer, but its central bank holds none. The Bank of Canada and Department of Finance have shown no indication of reversing this policy, maintaining a focus on liquid foreign exchange reserves (primarily UDS and other currencies) for stability and liquidity. [5]
Summary
In summary, Canada’s zero-gold stance is a deliberate outcome of prioritizing yield, liquidity, and fit-for-purpose reserves in a floating-rate, stable economy – contrasting with global trends that favour gold for diversification and risk hedging amid geopolitical uncertainty. This approach has been consistent for decades and reflects Canada’s unique economic and policy context.
Gold Proficiency
Sources:
[1] ca.finance.yahoo.com, https://ca.finance.yahoo.com/news/gold-remains-absent-canadas-foreign-190605722.html
[2] bankofcanada.ca, https://www.bankofcanada.ca/2019/02/taking-precautions-canadian-approach-foreign-reserves-management/
[3] brookings.edu, https://www.brookings.edu/articles/how-important-are-central-bank-holdings-of-gold/
[4] wisdomtree.com, https://www.wisdomtree.com/us/insights/blog/central-banks-gold-and-the-shifting-foundation-of-reserves
[5] canada.ca, https://www.canada.ca/en/department-finance/services/publications/monthly-official-international-reserves/2025/01.html
Disclaimer:
This summary is based on publicly available information from company and government sources. It is provided for educational and informational purposes only. Though it has been taken to ensure accuracy, we make no representations or warranties of the reliability of the information.
Forward-looking statements, projections and estimates are subject to risks as outlined in the original company disclosures. Readers should consult official texts for full context. Nothing in the articles constitute forecasting, investment or financial advice. Please seek guidance from a qualified professional before making any investment decisions.
Gold Proficiency
