The Latest On The
Bank of Canada 
Lawsuit

For those who don't know, the Bank of Canada has been engaged in an ongoing lawsuit with the Committee on Monetary and Economic Reform [COMER] for several years now.

Constitutional scholar Rocco Galati is the one who is representing COMER. And Galati has been arguing on their behalf over the last few years that the Bank of Canada should be restored to its original purpose of providing interest-free loans to the Canadian government for infrastructure and other endeavors.

This would reverse the present course which currently has Canada getting its loans from private banks and the Canadian people are paying trillions in interest.

The Bank of Canada, wholly owned by the Government of Canada, is Canada's central bank or monetary manager. Established in 1935 after the passing of the Bank of Canada Act, it issues paper currency, acts as fiscal agent and banker for the federal government, sets the bank rate and implements and helps to formulate monetary policy.

Latest On The Case

The Federal Court of Appeal previously upheld the decision of Justice Russell, dated April 24, 2014, that would allow for the Bank of Canada lawsuit to proceed.

This was despite the government's attempts to prevent the case from moving forward. COMER proceeded to file their amended statement of claim on March 26, 2015 and the Department of Justice indicated shortly after on April, 26th, 2015, that it would again move to strike the claim.

"I was served with what is an abusive motion to strike, which purports to [taking] a second run at the ruling of Justice Russell, and what he determined was justifiable and upheld previously by the Federal Court of Appeal on July 26 back in 2014," wrote Rocco Galati in an update on the case.

Galati announced in May 13th, 2015, that COMER would be seeking leave, to the Supreme Court of Canada, for the Federal Court of Appeal not having ordered the matter to proceed to trial on the main issues presented.

More recently, on October 14th, 2015, the Federal Court heard from the government on their motion to strike from the amended statement of claim that was filed for COMER back in March 26th, 2015. This is despite the Federal Court of Appeal's ruling having already dismissed the government's attempts.

"They moved to strike the whole claim, again, pretending that the Court of Appeal had not ruled that the 80% of the claim, which it ruled could proceed, should proceed," said Galati in the most recent update.

This lawsuit is one of the most important cases in Canadian history and not many people even know that it has been before the courts for several years now.

If successful, a win for COMER in this lawsuit would prompt a change that would see the Bank of Canada return to its pre-1974 mandate of lending interest-free money to federal, provincial, and municipal governments.

The government of Canada sold off large chunks of its gold reserves in recent weeks, continuing a pattern of moving away from the precious metal as a government asset. According to the International Monetary Fund’s International Financial Statistics, Canada held three tonnes of gold reserves as of late 2015.


Canada sells off large chunk of its gold reserves
Monique Muise National Online Journalist, Politics  Global News

The latest data, published last week by the Department of Finance, show the total Canadian gold reserves have now dropped to 0.62 tonnes. That’s less than 0.1 per cent of the country’s total reserves, which also include foreign currency deposits and bonds. In comparison, the U.S. holds 8,133 tonnes of gold, while the United Kingdom weighs in at 310 tonnes

The decision to sell came from Finance Minister Bill Morneau’s office.

“Canada’s gold reserves belong to the Government of Canada, and are held under the name of the Minister of Finance,” explained a spokesperson for the Bank of Canada on Wednesday. “Decisions relative to gold holdings are taken by the Minister of Finance.”

A spokesperson for the finance department said the sale “was done in the normal course of business for the government. The decision to sell the gold was not tied to a specific gold price, and sales are being conducted over a long period and in a controlled manner.”

This latest sell-off is indeed part of a much longer-term pattern of moving away from gold as a government-held asset. According to economist Ian Lee of the Sprott School of Business at Carleton University, Ottawa has no real reason to keep its gold reserves other than adhering to tradition.

“Under the old system, (gold) backed up currencies,” Lee explained. “The U.S. dollar was tied to gold. One ounce was worth US$35. Then in 1971, for lots of reasons I won’t get into, Richard Nixon took the United States off the gold standard.”

Gold and dollars were interchangeable until that point, he said, but in the modern financial world, the metal is no longer considered a form of currency.

The amount of gold the Canadian government holds has therefore been falling steadily since the mid-1960s, when over 1,000 tonnes were kept tucked away. Half of those reserves were sold by 1985, and then almost all the rest were sold through the 1990s up to 2002.

By last year, Canada’s reserves were down to just three tonnes, and the latest sales have now carved that back by over 60 per cent. At the current market rate, the value of 0.62 tonnes of gold comes in at just over CAD$38 million, barely a drop in the bucket when you consider the broader scope of federal finances.

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According to Lee, there may soon come a time when Canada’s gold reserves are entirely a thing of the past. There are better assets to focus on, he argued, calling the government’s decision to dump gold “wise and astute.”

“It gives them more strategic flexibility to sell the gold, take the money and invest in U.S. government bonds, or United Kingdom bonds or French bonds or German bonds,” Lee said.

“Central banks can hold the government bonds of other countries, and they also hold actual dollars. The Chinese Central Bank actually holds hundreds of billions of U.S. dollars. Dollars are very liquid, so are government bonds, especially of a Western country.”

Will we see in the near future 

a connection from selling Canadian Gold Reserves 

and a re-in statement of The Bank of Canada?