It’s said that when the United States sneezes, Canada catches a cold. When the U.S. feels queasy, however, Canada’s gold exports get a boost.
In April, Canada’s export volumes rose to an all-time high, surpassing prepandemic levels, Statistics Canada reported this week. The biggest driver of that rise was exports of gold as shipments of the metal from Canadian financial institutions to the U.S. soared against a backdrop of unease over Washington’s debt-limit fight and fears of a recession.
“These increases came amid a context of economic uncertainty, when investors tend to favour safe-haven metals such as gold and silver,” Statscan said in its release.
The moves follow what has become a familiar pattern: when uncertainty rises in the U.S., as measured by the Economic Policy Uncertainty index, so does gold’s share of Canada’s total exports.
Canadian gold exports rise with uncertainty
U.S. economic uncertainty
index
Gold as percentage
of total exports
350
9%
8
300
7
250
6
200
5
4
150
3
100
2
50
1
0
0
2007
2009
2011
2013
2015
2017
2019
2021
2023
the globe and mail, Source: Statistics Canada,
Policyuncertainty.com
Canadian gold exports rise with uncertainty
U.S. economic uncertainty
index
Gold as percentage
of total exports
350
9%
8
300
7
250
6
200
5
4
150
3
100
2
50
1
0
0
2007
2009
2011
2013
2015
2017
2019
2021
2023
the globe and mail, Source: Statistics Canada,
Policyuncertainty.com
Canadian gold exports rise with uncertainty
U.S. economic uncertainty index
Gold as percentage of total exports
350
9%
8
300
7
250
6
200
5
4
150
3
100
2
50
1
0
0
2007
2009
2011
2013
2015
2017
2019
2021
2023
the globe and mail, Source: Statistics Canada, Policyuncertainty.com
The index, maintained by a team of U.S. academics, tracks things such as news coverage of economic policy, federal tax code provisions set to expire and disagreements among economic forecasters.
For Canada, this anxiety-fuelled demand for gold has helped make trade a bright spot for the economy, with exports and consumer spending being the two big drivers of first-quarter growth, which beat analyst and Bank of Canada expectations.
The bank cited the growth surprise when it raised its policy rate to 4.75 per cent on Wednesday, and several economists said April’s strong trade activity could lift growth in the second quarter.
Still, as Export Development Canada’s chief economist Stuart Bergman told Reuters, the gold rush alone won’t be enough to sustain exports and growth. “Many of those volume shipments reflect those truckloads of gold being shipped down to the U.S. and so certainly that’s not something that we would expect to see repeated in future months,” he said.
Jason Kirby