Canada’s central bank shuns bullion while global investors rush to gold amid rising economic turmoil
Gold has shattered records by soaring past US$4,000 per troy ounce, yet Canada remains an outlier among advanced economies, holding no gold in its central bank reserves—a decision that continues to spark debate as global uncertainty drives investors toward safe-haven assets.
While many investors are flocking to gold as a hedge against inflation and market volatility, the Bank of Canada’s approach stands in stark contrast.
According to historical reports, the Bank once held as much as 1,023 tonnes of gold, but completed its divestment in 2016.
At today’s prices, that gold would be worth more than US$132bn, exceeding the country’s current foreign currency reserves, as reported by the Financial Post.
The rationale behind this policy, as explained by Timothy Lane, then-deputy governor of the Bank of Canada, is that US Treasuries and other foreign currencies are more liquid and pay interest, making them better suited for reserve purposes.
“While these assets may not have the reassuring physical heft of a gold bar, we believe they are better suited to the purposes for which we hold reserves,” Lane said in a 2019 speech, emphasizing that Canada’s reserves are primarily held “as a precaution” against extreme tail events.
Jeffrey Christian, managing director of the CPM Group, noted that the decision to sell gold made financial sense at the time and likely remains justified over the long term. He pointed out that gold incurs storage and transportation costs and does not pay interest.
Christian also described the move away from gold as “common wisdom” among central banks after the United States ended the gold standard in 1971.
Meanwhile, gold’s meteoric rise has been fuelled by a combination of factors.
According to CBC News, the current US government shutdown, ongoing trade tensions, and recent interest rate cuts by the Federal Reserve have all contributed to heightened demand for gold and other precious metals.
Gold futures have climbed about 50 percent since the start of 2025, while silver has surged by 60 percent.
Analysts, including Giovanni Staunovo of UBS Global Wealth Management, attribute the rally not only to economic turmoil but also to geopolitical events such as the wars in Gaza and Ukraine, and the freezing of Russian foreign holdings by Western allies.
Despite gold’s allure as a “safe haven asset,” as described by Staunovo, Canada’s Department of Finance maintains that high-quality, interest-bearing foreign-currency assets are better suited to the country’s reserve objectives.
“We believe that holding high-quality, interest-bearing foreign-currency assets is better suited than gold” for achieving these goals, said department spokesperson Benoit Sabourin.
