Why Gold?

The Bank of Canada's total reserve of just over 3 tons or about 0.003 ounces for every Canadian, equals about $5.80 per citizen.  A precious metal asset has an intrinsic value protecting 'wealth'. In the face of insolvency tomorrow, metals offer security.  A central bank alters the money supply by sterilizing its printed (fiat) money by buying or selling assets whenever the money supply is increased or decreased.  That asset is GOLD.

Holding gold by a lender boosts a country's credit rating - why? If a country balks at paying their debts, court orders by the World Bank’s International Center for Settlement of Investment Disputes (ICSID) could be secured to seize this real asset under stored in their vaults. Not all countries participate in the ICSID!

An insurer, if one can be found, could easily charge 4% of the market value of a stockpile of gold, plus security and shipping charges because moving gold is a problem.  A pirate could seize tons of gold in a single raid. Or a storm could take it to the muddy bottom of the ocean.

The most effective sanction against an 'independent' country is holding their gold reserves until it 'reforms'.

Currently the Government of Canada runs a deficit in part because it is cheap to do so due to low interest rates.  The Bank of Canada is buying Canadian debt. Refraining from buying federal debt now would cause interest rates to rise, potentially threatening Canadian solvency.

Some History:
1935 - 1972 - Canadian currency was directly redeemable for silver, with $1 CAD directly redeemable for silver coinage at a rate of 0.6 troy oz per dollar until 1966, 0.3 troy oz in 1968. Under the Bretton Woods Accord, post 1946, Canada held much of it's Forex reserves in US Dollars at a fixed rate to gold, (until Nixon closed the Gold window in 1971).

Current Events:
China is building up huge amounts of Forex and diversifying it from fiat US dollars into gold and hard assets.