A bad pattern

This columnist’s previous column cited the reasons for assuming much higher gold prices in the future.

Clearly, the gold reserves held by the Bank of Canada belong to all of us, and that should be respected and treated accordingly.

During the 1960s Canada held 1,000 tons of gold worth $12 trillion but much of that was sold before the price started rising, entailing a tremendous loss for all Canadians.  That sale probably reflected pressure from the United States, which wanted gold reserves to be sold and the proceeds placed in U.S. dollars. It is worth noting that the United States has not sold any of its gold.

Meanwhile China, an aspiring world economic power, has been steadily adding to its gold holdings all the time, thus recognizing the value of holding this strategic asset.

The judgement of the Bank of Canada continues to be terrible.

Beginning last December, just before gold broke out on the upside, the Bank of Canada has been selling more of its gold and in December-January sold, according to a press release, “large chunks of gold” worth more than $1 trillion. 

The proceeds were placed, as usual, in the U. S. dollar which is widely acknowledged to be over-priced in view of the chronic unfavourable trade balance of several hundred billion dollars annually.

The Canadian Department of Finance has stated implicitly that it plans to divest itself of all our gold.

We know that paper currency loses its value because of the excessive money printing of our governments. The latest sale, incidentally with very poor market timing, is just the latest installment of this wrong-head process.

Think what we could have done with the $12 trillion that has now “disappeared.” It is almost inconceivable that this process goes unheeded as our politicians are complicit in this program.

Inevitably the Canadian dollar will go the way of all fiat-paper currencies. Consider, for instance, the price of postage stamps, public transit, food or housing – in fact nearly everything – and how much those prices have risen in a generation.

Until we change our reckless, spendthrift ways, this dismal course of events will continue.  It is unfortunate that the public does not rise up in anger.

Perhaps the very poor performance of the Bank of Canada and its mishandling of our gold reserves will trigger a response from a roused public.



Bruce Whitestone