Many decades later, market enthusiasts will reminisce about this great gold bull run.

Of how Central Banks worldwide backed up their trucks onto the yellow metal.

And how the largest of them even proposed an audit of their reserves.

In the context of that, this post might strike a jarring tone; for it’s about:

(1) the burgeoning gold reserves at Central Banks;

(2) an upcoming gold audit at Fort Knox and gold repatriations; but it is also about ….

(3) a conspicuously empty gold vault.

#1, we leave this point as is because it’s so in your face

#2 is indicative of a heightened global gold anxiety ─ from the US Bill proposing a Fort Knox audit to countries like Germany, Poland, Hungary, and The Netherlands actively seeking to repatriate their gold held abroad.

It’s clear that most countries, not unlike Scrooge McDuck, want the comfort of lolling about in their massive gold vaults.

#3 One country, however, shows no signs of gold anxiety.

And no, it’s neither an Emerging nor a Frontier Market.

Its AAA rated, is a member of both the G7 and G20 group of nations, and … it has a gold vault that’s empty.

Canada holds virtually ZERO gold. (Image Source: Government of Canada)

Why?

(1) Gold earns zero yield. It’s at best a store of value (and the idea of Central Banks holding a store of value sure does appear contradictory when viewed in the context of their chief role as inflation-dampeners)

(2) Offloading large blocks is complex and expensive

(3) Canada’s stability comes from its credible institutions, conservative regulatory frameworks, rule of law, and ─ to use a nifty turn of phrase ─ its ‘gold-standard’ AAA credit rating.

(4) Lastly, the ZERO gold decision creates a strategic advantage for Canada over other G20 nations: the costs for securing bullion (think Security, Insurance, Vaulting, and now Audits) are soaring. Also, storing gold abroad (in the NY Fed, for example) creates vulnerability (Germany has been considering repatriating its massive stockpile of gold, currently held in the NY Fed over worries stemming from Trump’s caprices)

So, while the US braces itself for an exhaustive audit ─ and this one could be a lot more than a peek-a-boo glance at the gold ─ of its gold reserves, Canada’s absence of gold reserves reflects a modern calculus:

High costs, rising anxiety, poor liquidity, and the escalating storage burdens outweighs symbolic value.

Also, Canada, by virtue of being the 4th largest producer of gold, probably has the safest vault on the planet anyway ─ its bedrock and placer deposits.