Gold mining remains one of the world's more important mining sectors, and Canada has a particularly strong gold mining industry. This research considers the Canadian gold mining industry, including the industry environment, as well as the gold industry in general and factors which affect its performance.
In August 1971, President Nixon took the bold step of removing the American dollar from the gold standard, meaning that dollars would no longer be converted directly into gold by the American government. There were two immediate results of this action: currencies around the world returned to floating against each other, and the price of gold was no longer fixed at $35 per ounce. The stage was set for speculation in both currencies and gold.
Canada is currently the world's fourth largest producer of gold, and has been a leading producer of gold for many years. When Nixon removed the United States from the gold standard, demand from gold surged from consumer demand to speculative demand, and the price of gold quickly reflected that. With large gold reserves, Canada was in a unique position to take advantage of this opportunity, and Canadian gold mining companies (sometimes subsidiaries of larger Canadian mining operations) began exploring not only gold opportunities in Canada, but also in other parts of the world.
In 1996, Canada produced 7.1 percent of the world's gold, with $CAN3.5 billion (66 percent of production) exported to the United States and $CAN500 million (14 percent of production) exported to Switzerland. Gold prices have been falling over the last 12 years, but recent prices suggest that the commodity is suffering its greatest setback since the United States went off the gold standard. Several countries have sold large amounts of their gold reserves, putting additional downward pressure on gold prices. In mid-1997, Australia sold two-thirds of its gold reserves (sending the price from $332 an ounce to $3...