It’s the kind of quiet move that will likely inspire wild theories among gold bugs: The latest data on Canada’s international reserves revealed that the country’s central bank has liquidated the last of its foreign-exchange holdings in the yellow metal.

The timing of this action is perfect fodder for those with a bent towards conspiracies.

Canada’s newly elected Liberal government is set to unveil its budget later this month. And it’s expected to be supercharged with at least C$10 billion in stimulus spending on top of a deficit that’s already projected to be C$18.4 billion without it.

That would take the budget deficit close to levels that were last seen as Canada was emerging from the Great Recession.

Meanwhile, the Bank of Canada (BoC) is widely expected to cut rates by another quarter-point this year, which would bring its benchmark overnight rate to 0.25%, its lowest level since the downturn.

Gold Bugs Get Agitated

This confluence of events could animate gold bugs for a few different reasons.

For one, gold is widely viewed as an investment that holds its value against the sort of inflationary policies that governments and central bankers pursue to buy their way out of economic stagnation.

Of course, Canadian policymakers would love to see any sign of inflation, since that would suggest growth is finally heating up again. Instead, year-over-year growth in the consumer price index (CPI) has averaged just 1.4% since the beginning of 2012, well below the 2% midpoint of the BoC’s targeted range of 1% to 3%.

The CPI has perked up more recently, hitting 2.0% in January, after averaging just 1.2% last year. However, economists believe the latest headline number will prove transitory owing to low gasoline prices and the sharp rebound in the Canadian dollar. The loonie has climbed nearly 10% since its late-January low and currently trades just above US$0.75.

Gold is also used as a safe haven during periods of market turmoil. And we’ve certainly seen plenty of that since the beginning of the year. Consequently, investors have piled into the yellow metal, pushing the spot price up nearly 20% on a year-to-date basis, to $1,267.65 per ounce, its highest level in more than a year.

Though global markets have been in rally mode recently, we could see more volatility in the months ahead if deflationary trends persist.

Lastly, Canada ranks among the world’s top gold producers, and that along with its abundance of other resource riches, from timber to energy, made Canadian dollar-denominated securities a top destination for hard-assets investors during the commodities boom.

So it’s admittedly an odd turn of events to look at the country’s official international reserves and see a big, round goose egg listed next to gold.

At the same time, gold has had a largely token presence for years compared to the other holdings in Canada’s Exchange Fund Account (EFA).

The EFA’s gold holdings last peaked at US$572 million back in mid-1999. Since then, the central bank has steadily wound down its gold position, though there have been a few periods when holdings were moderately increased.

But over the past five years, the EFA’s gold holdings have averaged just US$140 million, which is a pittance compared to the full value of the account—recently at US$81.5 billion.

Nevertheless, hard-assets mavens will likely note the contrast between Canada’s holdings and those of its peers. For instance, the U.S. still holds $11 billion in gold in its international reserves, which include assets totaling nearly $119 billion.

And Australia, which like Canada is a developed-world country with a resource-oriented economy, holds US$3.2 billion in gold in its reserves out of US$43.7 billion in total assets.

While both the U.S. and Australia’s gold holdings account for less than 10% of their foreign reserves, both positions are roughly sized at the amount that some investors, even non-gold bugs, typically hold as a hedge against uncertainty.

The Best-Laid Plans …

So why did Canada choose to take its gold holdings down to zero? A spokesperson with Canada’s Department of Finance told The Globe and Mail that “the government has a long-standing policy of diversifying its portfolio by selling physical commodities (such as gold) and instead investing in financial assets that are easily tradable and that have deep markets of buyers and sellers.”

That comports with the BoC’s autumn review, which detailed recent enhancements to the management of Canada’s foreign reserves.

The EFA exists to provide foreign-currency liquidity for the government, as well as to promote an orderly market for the Canadian dollar, possibly by deploying reserves in a foreign-exchange market intervention, if necessary.

As such, the BoC’s objectives are to manage the country’s foreign reserves in a way that maintains a high degree of liquidity, while preserving value and optimizing return.

To achieve these ends, the central bank decided to limit its holdings to currencies and fixed-income securities with maturities of no more than 10.5 years that are denominated in U.S. dollars, euros, Japanese yen, or British pounds.

At least for now, gold apparently no longer has a place within this framework.

Though gold bugs likely view such an approach with deep skepticism, the demise of the Bretton Woods system—when the U.S. ceased allowing the dollar to be convertible into gold—effectively ended gold’s role in monetary policy decades ago.

Of course, there could come a day when the best and brightest change their minds about the gold standard being a “barbarous relic,” as famed economist John Maynard Keynes once put it.

After all, gold has been a means of exchange for millennia. Perhaps the long arc of monetary history still bends toward gold, regardless of what technocrats might prefer.