In 1965, Canada stood tall among global economic powers with over 1,023 metric tonnes of gold in its reserves, a symbol of national wealth, economic stability, and international trust under the then-prevailing Bretton Woods monetary system. By 2016, that glittering mountain of economic security had been reduced to a mere 77 ounces in gold coins worth less than C$130,000 at the time, leaving Canada as the only G7 nation without significant gold reserves.
This remarkable liquidation wasn’t the result of a single decision but rather the culmination of decades-long policy shifts. Successive governments, starting in the 1970s and continuing through Prime Ministers Pierre Trudeau, Brian Mulroney, Jean Chrétien, Paul Martin, Stephen Harper, and finally Justin Trudeau, steadily moved away from gold, driven by a philosophy that prized liquid foreign currencies and interest-bearing securities over a non-yielding, illiquid commodity. But now, with gold prices soaring recently, topping US$4,200 per ounce and major central banks aggressively increasing their gold holdings, Canada’s decision to part with one of civilization’s oldest and most trusted stores of value is under intense scrutiny.
Canada’s gold reserves peaked in 1965 under Prime Minister Lester B. Pearson. At the time, gold was the backbone of global finance; the Bretton Woods system required participating nations to maintain reserve assets in gold or U.S. dollars. As such, Canada’s holdings were neither excessive nor unusual.
However, the international economic paradigm shifted with the collapse of the gold standard in 1971, under U.S. President Richard Nixon. Suddenly, the dollar was no longer convertible to gold, and national currencies floated freely. Without a gold-backed system, many countries began reconsidering the role of bullion in their reserves. Canada was among the first to act on this shift.
The sell-off began in earnest in the late 1970s and accelerated through the 1980s and 1990s. Finance ministers across multiple administrations, Allan MacEachen, Michael Wilson, Don Mazankowski, and Paul Martin, consistently approved gold sales, prioritizing liquid foreign assets that could be easily traded and offer currency support when needed. By the early 2000s, only a fraction of Canada’s original reserve remained. Under Bill Morneau, the Finance Minister in Prime Minister Justin Trudeau’s government, the final ounces were sold off in 2016. The Department of Finance repeatedly justified these decisions with the position that “interest-bearing, highly liquid foreign currency assets are better suited” for reserve purposes.
Canada’s rationale rested on strategic and economic arguments rooted in the post-gold-standard world. Officials argued that gold had become outdated in the context of modern reserve management. Former Finance official Don Drummond labeled gold a poor long-term investment, noting its lack of income generation and high storage costs. Others pointed to its historical volatility and argued that foreign currencies and government bonds offered more stability and better returns. But Canada’s approach stands out because it went farther than any other developed nation: it sold everything.
Even the U.K., notorious for selling off 395 tonnes of its reserves at low prices between 1999 and 2002, still retains hundreds of tonnes today. Meanwhile, countries like the U.S. (8,133 tonnes), Germany (3,352 tonnes), and even Russia (2,336 tonnes) have maintained or increased their holdings in recent years.
In hindsight, Canada’s timing appears profoundly misguided. Since 2010, central banks globally, including emerging powerhouses like China, India, and Poland, have become net buyers of gold. Concerns over inflation, geopolitical tensions, collapsing faith in fiat currencies, and declining U.S. monetary credibility have spurred this shift. According to the World Gold Council, central banks have added over 1,000 tonnes of gold per year for the past three years, doubling the pace from the previous decade.
Recent surveys show that 43% of central banks plan to increase gold reserves, while none intend to reduce them. Even the U.S. dollar is losing share in global foreign reserves holdings, with 73% of central banks expecting a decline in its dominance over the next five years. Amid that trend, Canada holds nothing but paper assets of over US$127 billion in foreign exchange, heavily (54%) denominated in U.S. dollars. This over-reliance on one currency adds financial exposure, particularly at a time when political instability and weakening fiscal discipline in the U.S. are raising alarm.
In 2016, Canada’s final exit from gold was completed at prices a fraction of today’s market value. Commodities strategist Bart Malek of TD Securities estimates that Canada’s 1965 reserves of 32.9 million ounces would today be worth over US$125 billion, anachronistically matching the total value of Canada’s current international reserves.
"It might have been a mistake," said Malek, who now calls on policymakers to diversify their holdings, especially during uncertain economic conditions. “It’s an asset. It’s no one’s liability, and there’s no counterparty risk,” he added, stressing gold’s role as a buffer against inflation, currency depreciation, and broader market instability. That sentiment is echoed across the mining sector, which finds it bitterly ironic that Canada a top-five global gold producer holds nothing of the precious metal it extracts in such abundance.“Unfortunately, Canada has not made a policy of actually holding on to some gold, because it would be worth so much today,” said Pierre Gratton, President and CEO of the Mining Association of Canada. “We’d be in such a better position fiscally… but we didn’t.”
Canada’s liquidation of gold may have appeared logical in a post-Bretton Woods, low-inflation, interest-bearing era of the 1990s and early 2000s. The U.S. dollar was stable, trust in global institutions was high, and inflation seemed dead. Gold felt antiquated. But in today’s world, characterized by financial uncertainty, destabilized fiat currencies, geopolitical conflict, and resurgent inflation, gold is being rediscovered as a strategic hedge. What makes Canada's situation exceptional is not that it sold its gold, but that it never looked back. Every G7 peer slowed their sales or reversed course. Canada went all the way to zero and stayed there.
Canada’s full liquidation of its gold reserves is not a blunder rooted in incompetence, but rather an example of persistent short-term financial reasoning overriding long-term strategic foresight. In an effort to streamline its reserves with liquid, interest-yielding assets, Canada discarded an enduring pillar of monetary confidence.
While gold may not yield income like bonds or currency swaps, its intrinsic value and historical resilience continue to make it an indispensable layer of security for much of the world.
As reserve currencies waver and financial paradigms evolve, Canada's empty vault serves as a cautionary tale, one that may prompt current and future policymakers to reassess what modern reserve management should truly look like in an age of global uncertainty. Only time will tell whether Canada’s bold departure from bullion was visionary foresight or an expensive mistake.