The official line from Ottawa has it that the Department of Finance is continuing its shameful gold selloff — another 276,000 oz. were sold in June — because “they (gold bullion) don’t make returns (such as interest).” The official line, we believe, is bunk.
Ottawa is selling gold because it is desperate. How desperate? Well consider that, when there’s a run on the Canadian dollar in the international currency exchange markets, the government shores up our currency by using government “reserves” (gold, the U.S. dollar and other currencies) to buy the Canadian dollar in the open market, thus cushioning the decline in value. Unfortunately, government reserves are rapidly running down. In January, 1991, they reached a peak of US$18.87 billion. In June of this year, they were a measly US$11.9 billion.
On a related front, foreign investors have finally come to the realization that this country is not the safe haven it once was. A massive national debt, coupled with the threat of Quebec’s separation, has led investors to demand a premium (i.e., higher rates of return) on government bonds, and so on. So the inevitable headlines appear: “German fund managers nervous about Canadian political instability” and “Canada facing investor revolt.” And we wonder anxiously whether this is just another case of Chicken Little and the falling-sky syndrome, or whether, if not the sky, then the roof is finally caving in on us.
American writer and philosopher Henry David Thoreau wrote that “it is a characteristic of wisdom not to do desperate things.” The rate of the gold selloff in this country is decidedly unwise.
Be the first to comment on "EDITORIAL PAGE — Selling off our future"