It is never a good sign when a trade surplus is driven by exports of unwrought gold (Gold in it’s raw form). If you are Canadian, you already know that Justin Trudeau sold off Canada’s gold reserves. So when Canada posts what can only be described as a minuscule trade surplus, and Statistics Canada lists unwrought gold as one of the primary drivers during a period of rising gold prices, you have to ask yourself whether this looks like the early stages of an economic collapse.
Gold Prices at Record Highs Signal Currency Stress
Gold and silver are currently trading at record highs. That means these metals are being sold at historically elevated prices. If you understand anything about Switzerland, which has purchased a significant portion of this gold, it becomes clear why this is happening. Those of us who follow markets closely recognize this as a response to currency debasement.
Switzerland has long maintained strong property rights embedded in its constitutional framework. Even Switzerland has had to suppress the value of the Swiss franc at times to prevent excessive appreciation. Those who have lived through previous economic cycles understand that Switzerland will still move to devalue its currency when necessary, often by accumulating gold.
Tariffs and Deflationary Pressure on the Global Economy
Donald Trump has imposed tariffs, and one reason the United States traditionally avoids tariffs is because they are deflationary to the global economy. Tariffs function as taxes within the private sector and act as a form of price control. Historically, this punishes the currency implementing them.
You might ask whether that is a good thing. Historically, it is not. Western welfare states are largely funded through currency debasement. The United States, like Switzerland, has strong property rights written into its constitution, which limits how far debasement can go. Switzerland itself has actively worked to prevent excessive appreciation of its currency, which again explains its interest in gold.
Canada’s Gold Problem
Canada, by contrast, operates as a gold-mining country without meaningful gold reserves. The gold that does exist is being sold off at what can only be described as bargain prices. If I did not live in Canada, I would find this situation laughable.
What is more alarming is Canada’s import data. Imports fell 1.7 percent, marking the third consecutive monthly decline. This signals a deflating economy occurring alongside record levels of money creation.
The Illusion of a Trade Surplus
After months of declines, Canada recorded a trade surplus of $153 million in September. To put this into perspective, Canada had a trade deficit of $6.4 billion in August.
- -$6,400,000,000, August trade deficit
- +$153,000,000, September trade surplus
- -$6.4 billion + $153 million = $-6,247,000,000
-$6.4 billion plus $153 million equals a net negative of $6.247 billion.
I hope this provides proper context. Record deficits were the norm month after month under Justin Trudeau.
Canada Is Headed Toward a Credit Downgrade
In my opinion, Canada is heading toward a credit downgrade. If you are reading this and live in Canada, you should consider preparing accordingly.
In September, merchandise exports rose 6.3 percent, while imports fell 4.1 percent. These opposing movements shifted Canada’s trade position from a $6.4 billion deficit in August to a slight surplus of $153 million in September. This represents an essentially balanced position, not genuine economic strength.
Exports Driven by Unwrought Gold
After declining 3.2 percent in August, total exports rebounded by 6.3 percent in September. This was the largest monthly increase since February 2024. Gains were recorded in nine of eleven product categories.
The largest contributor was metal and non-metallic mineral products, driven primarily by exports of unwrought gold. Excluding unwrought gold, silver, platinum group metals, and their alloys, exports increased by 4.5 percent. In real volume terms, exports rose 4.1 percent.
Exports of unwrought gold, silver, and platinum group metals increased 30.2 percent in September, largely due to higher shipments to Switzerland, the United States, and the United Kingdom.
While exports of unwrought aluminum and aluminum alloys also increased 18.6 percent in September, they remain down 16.7 percent compared to the same month in 2024.
Final Thoughts
A trade surplus driven by selling off unwrought gold at record prices is not a sign of strength. It is a warning. Canada’s structural deficits, declining imports, currency debasement, and reliance on asset liquidation all point toward a worsening economic outlook.
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