Canada selling its gold reserves - down to last 100,000 ounces, which is in coins!
DaveG
Posts: 3,535 ✭
I stumbled across this article a few days ago. Has anyone heard anything more recent?
Canada's Stash of Coins Is Final Hurdle in Plan to Sell Gold
2004-02-04 14:27 (New York)
Canada's Stash of Coins Is Final Hurdle in Plan to Sell Gold
By Kevin Carmichael
Feb. 4 (Bloomberg) -- Canada's gold reserves have been
reduced to a pile of loose change.
After more than two decades of what the Finance Department
describes as ``gradual and controlled'' selling, the last of the
country's 20.9 million ounces of gold bullion left the Bank of
Canada in December.
That leaves the central bank with 100,000 ounces of gold
coins in reserves in Ottawa. And the Canadian government, which
wants to complete a plan to clean the gold out of its vaults, is
unsure what to do with them.
``It's a different market than bullion,'' Finance Department
spokeswoman Andree Houde said in an interview. ``What we decide
to do can affect the value of the coins held by gold
collectors.''
Canada has been selling off its gold reserves for almost 25
years, replacing them with assets that generate income, such as
international bonds. The 21 million ounces of gold it had at the
outset would be worth about $8.4 billion at current prices.
The federal government has made $13 billion selling its gold
and investing the proceeds, Houde said. Getting rid of the coin
stash would make Canada the first member of the Group of Seven
industrialized nations to eliminate its gold reserves. The G-7's
other members -- the U.S., Japan, Germany, the U.K., France and
Italy -- still hold bullion.
Gold Standard
Until 1971, when Former President Richard Nixon ended the
``gold standard,'' the value of the U.S. dollar was backed by the
U.S. government's gold reserves. Countries such as New Zealand,
Israel and Oman have since cleaned out their vaults of gold,
according to the World Gold Council.
Canada dropped its gold standard in 1931 and began selling
its reserves in 1980.
``The policy is still on,'' Houde said. ``The difference is
that additional factors have to be considered.''
Houde declined to discuss the face value of the coins, their
condition, or give any description, saying such information was
commercially sensitive.
That makes it impossible to assess the value of the cache,
and the effect the release of 100,000 ounces would have on coin
prices, coin dealers contacted by Bloomberg News said.
Price Declines Feared
Cameron Bevers, who runs Colonial Acres Coins in Kitchener,
Ontario, said he knows of only two types of coins the government
could hold as reserves. The most likely would be the so-called
Maple Leaf coins issued annually for the past 25 years by the
Royal Canadian Mint, the government-owned coin maker.
Collectors have little interest in them outside their gold
value, Bevers said in a telephone interview.
Alternatively, the government may have retained some of the
675,000 C$5 and C$10 gold coins minted between 1912 and 1914 to
back the country's paper currency, said Bevers. A C$10 piece from
1914 might be worth C$1,000 to a collector, even though its gold
value is only about C$250.
``I'd be annoyed,'' if the government suddenly released a
large quantity of those coins, said Bevers, 29, who has been
collecting since 1985 and dealing since 1991. ``If I was holding
lots of them, it would be devastating.''
Some Favor Melting
Bevers said it's unlikely the Bank of Canada has much in the
way of foreign gold coins, since there are so many of them in
circulation that the government wouldn't be concerned with the
impact of sales on market values.
Houde declined to say when the government might offer the
coins for sale.
Canada also is considering options such as melting down the
coins and selling them as bullion, she said. The 100,000 ounces
in coins would have a bullion value of $39.9 million at today's
gold price in London of $399.25 per ounce.
Calgary dealer Robert Kokotailo favors that alternative,
saying he doubts the government holds coins of value to
collectors. If it does, and decided to sell them, his clients
would be hurt, Kokotailo said.
``Could they be holding gold sovereigns from the early
period?'' he asked in a telephone interview from his shop,
Calgary Coin Gallery. ``If they are, that could cause a problem
in the market for collectors of those coins.''
--With reporting by Greg Quinn. Editors: Schatzker, Jarvie.
Canada's Stash of Coins Is Final Hurdle in Plan to Sell Gold
2004-02-04 14:27 (New York)
Canada's Stash of Coins Is Final Hurdle in Plan to Sell Gold
By Kevin Carmichael
Feb. 4 (Bloomberg) -- Canada's gold reserves have been
reduced to a pile of loose change.
After more than two decades of what the Finance Department
describes as ``gradual and controlled'' selling, the last of the
country's 20.9 million ounces of gold bullion left the Bank of
Canada in December.
That leaves the central bank with 100,000 ounces of gold
coins in reserves in Ottawa. And the Canadian government, which
wants to complete a plan to clean the gold out of its vaults, is
unsure what to do with them.
``It's a different market than bullion,'' Finance Department
spokeswoman Andree Houde said in an interview. ``What we decide
to do can affect the value of the coins held by gold
collectors.''
Canada has been selling off its gold reserves for almost 25
years, replacing them with assets that generate income, such as
international bonds. The 21 million ounces of gold it had at the
outset would be worth about $8.4 billion at current prices.
The federal government has made $13 billion selling its gold
and investing the proceeds, Houde said. Getting rid of the coin
stash would make Canada the first member of the Group of Seven
industrialized nations to eliminate its gold reserves. The G-7's
other members -- the U.S., Japan, Germany, the U.K., France and
Italy -- still hold bullion.
Gold Standard
Until 1971, when Former President Richard Nixon ended the
``gold standard,'' the value of the U.S. dollar was backed by the
U.S. government's gold reserves. Countries such as New Zealand,
Israel and Oman have since cleaned out their vaults of gold,
according to the World Gold Council.
Canada dropped its gold standard in 1931 and began selling
its reserves in 1980.
``The policy is still on,'' Houde said. ``The difference is
that additional factors have to be considered.''
Houde declined to discuss the face value of the coins, their
condition, or give any description, saying such information was
commercially sensitive.
That makes it impossible to assess the value of the cache,
and the effect the release of 100,000 ounces would have on coin
prices, coin dealers contacted by Bloomberg News said.
Price Declines Feared
Cameron Bevers, who runs Colonial Acres Coins in Kitchener,
Ontario, said he knows of only two types of coins the government
could hold as reserves. The most likely would be the so-called
Maple Leaf coins issued annually for the past 25 years by the
Royal Canadian Mint, the government-owned coin maker.
Collectors have little interest in them outside their gold
value, Bevers said in a telephone interview.
Alternatively, the government may have retained some of the
675,000 C$5 and C$10 gold coins minted between 1912 and 1914 to
back the country's paper currency, said Bevers. A C$10 piece from
1914 might be worth C$1,000 to a collector, even though its gold
value is only about C$250.
``I'd be annoyed,'' if the government suddenly released a
large quantity of those coins, said Bevers, 29, who has been
collecting since 1985 and dealing since 1991. ``If I was holding
lots of them, it would be devastating.''
Some Favor Melting
Bevers said it's unlikely the Bank of Canada has much in the
way of foreign gold coins, since there are so many of them in
circulation that the government wouldn't be concerned with the
impact of sales on market values.
Houde declined to say when the government might offer the
coins for sale.
Canada also is considering options such as melting down the
coins and selling them as bullion, she said. The 100,000 ounces
in coins would have a bullion value of $39.9 million at today's
gold price in London of $399.25 per ounce.
Calgary dealer Robert Kokotailo favors that alternative,
saying he doubts the government holds coins of value to
collectors. If it does, and decided to sell them, his clients
would be hurt, Kokotailo said.
``Could they be holding gold sovereigns from the early
period?'' he asked in a telephone interview from his shop,
Calgary Coin Gallery. ``If they are, that could cause a problem
in the market for collectors of those coins.''
--With reporting by Greg Quinn. Editors: Schatzker, Jarvie.
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Comments
<< <i>That leaves the central bank with 100,000 ounces of gold coins >>
Sure depends a lot on exactly what they are. Dumping 100K new Maple Leafs probably wouldn't have much effect on the bullion market, but an extra 100K of pre-WW I sovereigns could really impact the Canadian collectors
would have minimal impact on any market. It also doesn't seem a given that they are
actually Canadian gold coins. There are many ways a government can come into possesion
of gold and it's entirely possible that many of these ways are represented in this accumulation.
It would seem that there are significant numbers of at least a few coins since they are con-
cerned with releasing details for fear of damaging markets.
Obscurum per obscurius
<< <i>I heard there were several hundred British Columbia $10 and $20 gold pieces. >>
<< <i>Go ahead! Flood the market!
Why not? Shipwreck salvaging is bringing lots of 1850's and 1860's US gold to market!
Obscurum per obscurius
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
I agree, let the chips fall where they will. Don't arbitrarily protect investors from new developments. It is almost as bad as the DeBeers Cartel control of the Diamond Market.
<< <i>Why destroy history to line the pockets of collectors? Similar things have happened before in the US. Wasn't the 1904 Morgan rare until a government stash was liquidated? Or was that another Morgan dollar?
I agree, let the chips fall where they will. Don't arbitrarily protect investors from new developments. It is almost as bad as the DeBeers Cartel control of the Diamond Market. >>
The treasury releases in 1963/'64 involved many dates of Morgan dollars and even
a few trade dollars. The most heavily impacted date in the short run was the 1903-O,
but it was the 1904-O which never really recovered from the drop.
I don't have a very strong opinion on what should be the disposition of these coins, but
am very pleased that this is not a concern in any of my specialties. Mints and governments
not only melt left over base metal coins but most obligingly will even recall them first!