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Canada Now Ranks at the Bottom of the Pack in the Race for Gold

The Huffington Post logo The Huffington Post 9/03/2016 Jack Choros
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The Great White North isn't exactly in a gold rush. Just last month, the Canadian government decided to get rid of all but a few tonnes of the precious metal in favour of investing in foreign assets. It's a strategy our nation has used for a long time.
The fact is that gold is expensive to store. Even still however, Canada's commitment to selling it off is an approach quite different from other developed nations. In fact, four of the 10 countries with the most gold in their reserves attribute at least 55% of their total reserves to the metal. The United States leads the way with well over 8,100 tonnes of gold stockpiled.
Just to put it in perspective, Canada now ranks in 99th spot in the latest World Gold Council rankings, right between Haiti and Albania. The amount of gold available in this country is now so low, it actually officially counts as zero, since gold statistics are normally rounded to the nearest $1 million.
While all this probably doesn't mean anything at all to the average Canadian, the fact is that people tend to buy gold when the economy is in rough shape, and well, the Canadian dollar has seen better days. The loonie hit a 12-year low in January, and with a Bank of Canada interest rate decision looming, who knows where the price is heading next. One thing is for sure though, if the dollar is headed lower, and the economy continues to struggle, the stock market will inevitably follow, which means more Canadians will look to precious metals for investment opportunities.
This will of course all happen within the context of the never-ending race to stay ahead of inflation, which is always a challenge. Consider that since 1960, inflation has increased the cost of living over 718%. That's an average of 3.82% per year. Just knowing those numbers as a former banker myself, it's easy to see why the gap between the rich and the poor continues to get wider and wider. People who can't afford to take on the inherent risks associated with investing simply don't invest at all.
The silver lining in all of this however is that Canada's commitment to selling off gold doesn't necessarily have a negative impact on the loonie itself. At the present moment, no country in the world uses gold to back its currency. And the fact is, having a lot of gold locked up in a vault somewhere isn't what improves a country's economy anyway. The wealth of country is based on people producing, on entrepreneurs coming up with great ideas that are profitable, and on the nation itself having access to capital.
So even though it might sound like an awful move for a nation to divest itself of an asset and sell off more than a billion dollars' of gold, it's really not a necessarily a bad thing or even a good thing. Perhaps it's just an investment strategy Canada has already been following for a long time now. Trading in a time-tested asset that's more difficult to trade for others that can be easily exchanged with our nation's business partners worldwide.

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