As of 1965, Canada's gold holdings were worth approximately $1.15 billion. Converted to today's gold prices, this amount would be equivalent to approximately $149 billion, or nearly 200 trillion won. However, Canada sold all of this gold, and is currently the only country among the Group of Seven (G7) countries with virtually zero central bank gold reserves.
Canada's gold sales were not a short-term decision, but rather a gradual process over several decades. It steadily reduced its holdings since the 1990s, and by the mid-2010s, it had sold off the last remaining gold. As a result, gold was completely eliminated from Canada's foreign exchange reserves.
Canada's rationale was clear: gold pays no interest, and it was more efficient to invest foreign exchange reserves in liquid and profitable assets like government bonds. The perception that bonds denominated in major currencies like the dollar and euro are more suitable for the modern financial system also played a role.
However, this choice has become increasingly controversial. Gold prices have risen dramatically over the past half-century, and central bank gold holding strategies have shifted in the opposite direction, particularly since the global financial crisis. Other G7 countries, including the US, Germany, France, Italy, Japan, and the UK, all still hold significant gold reserves.
Recently, the strategic value of gold has been re-emerging amidst geopolitical tensions, high inflation, widening fiscal deficits, and fragmentation of the monetary order. Gold is relatively immune to the risk of international sanctions and has served as a trusted asset during times of financial system instability. Consequently, gold purchases are continuing not only in emerging market central banks but also in major economies.
Ironically, Canada is one of the world's leading gold producers. Despite its massive gold production, Canada has developed a unique structure: it maintains no national gold reserves. This is the result of a policy choice that views gold solely as an "industrial and export resource" and not as a monetary asset.
Ultimately, Canada's case doesn't argue that gold is no longer a necessary asset, but rather demonstrates how the financial environment and policy decisions of a specific time can make a significant difference in the long run. As central banks around the world are once again turning to gold, Canada's "gold-free" strategy remains an exception rather than a pioneering choice.
