Countries Around The World Are Bringing Gold Home
The comments below are an edited and abridged synopsis of an article by Virginia Fidler
The ECB’s President Mario Draghi recently announced that the ECB would have to approve any management of gold reserves within Eurozone countries.
The statement was directed at Italy, because its citizens are preparing to take control of Italy’s gold reserves. During the past few years, investors lost billions due to the failure of several Italian banks. The Bank of Italy is seen as an elitist, inefficient entity indifferent to the needs of ordinary people. The deputy prime minister is leading the attack against Italy’s central bank, along with the 5 Star Movement and the nationalist League, all of whom blame the country’s financial woes on the central bank’s incompetence.
The 5 Star Movement wants Italy’s parliament to approve measures that would allow private banks to sell their share in the Bank of Italy at 1930s prices. They are also demanding that ownership of the Bank of Italy’s 2,451.8 tons of gold ($102 billion) be taken over by the country’s citizens and spent on populist policies.
If these laws are passed, investors would be able to sell gold and greatly deplete the central bank’s reserves. As Giorgia Meloni of the Brothers of Italy states, “The gold belongs to the Italians, not the bankers.”
Italy’s lawmakers hold a different view and are warning against any action that will upend the sovereignty of the central bank’s policies. Such expropriation of government gold would not be tolerated.
But the 5 Star Movement and the League are determined to return ownership of the country’s gold to the public. Approximately 60% of lawmakers support the movement, guarantying the law will be enacted. There is also rumbling about nationalizing the Central Bank of Italy entirely.
In the realm of global commerce, gold has become a potent weapon. Romania, Germany and Hungary are all recalling stores of gold currently kept abroad (in the UK, the US and France).
Gold is seen by central banks as a way to maintain financial trust during economic upheaval. The move by global central banks to repatriate their gold may be a sign that an economic crisis lies ahead.