With much of the world focused on the political crisis in Venezuela and the Maduro regime’s attempts to get its gold back, the worsening political climate in Europe has been relegated largely to the back burner. But with Italy in the midst of both internal and external political turmoil, it could play a role in an expanding crisis within the eurozone.
Deputy Prime Minister Matteo Salvini has called for the Italian state to clarify control of Italy’s gold reserves, making clear that the gold is owned by the Italian state and not by the government. Currently the gold reserves are controlled by the Italian central bank.
Legislation has been introduced by Italian legislator Claudio Borghi to clarify the ownership of Italy’s gold reserves. Italy’s gold reserves of just over 2,450 tonnes are the fourth-largest in the world, behind the United States, Germany, and the International Monetary Fund.
Many of Salvini’s political opponents are afraid that he will use state ownership of gold reserves in an attempt to sell some of that gold to shore up the Italian government’s shaky finances. Yet Salvini himself is afraid that the central bank may try to sell some of the gold on its own in order to undercut a government with which it has always clashed. Now the gold is being used as a pawn in the fight between the populist government and the establishment institutions with which so many Italians are fed up.
With a banking system that is among the weakest in Europe and that threatens to be the epicenter of the next eurozone banking crisis, and a political squabble with France that threatens to upend European political cooperation, a real crisis in Italy could open up a huge can of worms in Europe. That’s one of many reasons why investors in Europe are snatching up as much gold as they can. And if Europe ends up in turmoil, investors on this side of the Atlantic would be wise to do the same.
This article was originally posted on Goldco.
