"It Belongs To The People, Not The Bankers" - Italy Moves To Seize Gold From Central Bank

[DamianTV]

https://www.zerohedge.com/news/2019-...d-central-bank

Two weeks ago, somewhat out of the blue, ECB President Mario Draghi issued an odd statement confirming that the European Central Bank needs to approve any operation in the foreign reserves of euro zone countries, including gold and large foreign currency holdings.

“The ECB shall approve both the operations in foreign reserve assets remaining with the NCBs (national central banks)...and Member States’ transactions with their foreign exchange working balances above a certain threshold,”

“The purpose of this competence is to ensure consistency with the exchange rate and monetary policy of the Union.”

Specifically, Draghi made this statement to two Italian members of the European Parliament.

At the time it did not seem notable for any reason other than its peculiar timing, but now things are starting to make more sense as The Wall Street Journal reports that Italy’s ruling populists pushed ahead this week with efforts to seize control of the central bank and its gold reserves.

Complaining that hundreds of thousands of small individual investors lost billions of dollars after several Italian banks failed in recent years, the anti-establishment '5 Star Movement' and the nationalist 'League', depict the central bank as a symbol of a technocratic elite aloof from the needs of ordinary Italians.

“We need a change of course at the Bank of Italy if we think about what happened in the last years,” said Deputy Prime Minister Luigi Di Maio, leader of the 5 Star Movement.

Five Star and the League have repeatedly attacked the Bank of Italy for not preventing the banking crises, and blamed it for the losses suffered by mom-and-pop savers who had bought bank shares and bonds.

“If you are here with your current account in the red, it’s because the people who were supposed to control things didn’t do so,” League’s leader, Interior Minister Matteo Salvini, told a group of former investors in Banca Popolare di Vicenza, which was liquidated in 2017.

And this week saw Italian lawmakers from 5 Star asking Parliament to pass two draft laws:

One law would instruct the central bank’s owners, most of them private banks, to sell their shares to the Italian Treasury at prices from the 1930s.

The other law would declare the Italian people to be the owners of the Bank of Italy’s reserve of 2451.8 metric tons of gold, worth around $102 billion at current prices.

As The Wall Street Journal notes, such a move could in theory widen the scope for selling the gold and reduce the bank’s reserves, which help underpin the financial system...

...

But but gold isnt money, paper is!

[Zippyjuan]

https://www.reuters.com/article/us-i...-idUSKCN1Q20Q1

The idea that Italy could sell part of its gold reserves to fill budget shortfalls has sparked outcry in Germany, Daniel Gros, a German economist and Director of the Centre for European Policy Studies, said on the same TV programme.

In an exchange with Borghi, Gros added: “Some conservative financial circles believe Italy is on the edge of collapse and see its gold reserves as the only available collateral in case of a bailout”.

[devil21]

Italy making the first official moves to recreate the appearance of a gold standard by nationalizing the CB and taking back custodial title of the gold held there. What happens in Italy is pretty much the blueprint for what will happen most everywhere.

[Origanalist]

So are they going to give it to "the people"?

[Zippyjuan]

Italy making the first official moves to recreate the appearance of a gold standard by nationalizing the CB and taking back custodial title of the gold held there. What happens in Italy is pretty much the blueprint for what will happen most everywhere.

They just want to borrow more money- not a gold standard.

[devil21]

They just want to borrow more money- not a gold standard.

Sure sure.

So are they going to give it to "the people"?

Be serious.

Check out my crystal ball for some answers to what has happened and what will happen.
http://www.ronpaulforums.com/showthr...-money-is-done

[Zippyjuan]

Sure sure.



Be serious.

Check out my crystal ball for some answers of what has happened and what will happen.
http://www.ronpaulforums.com/showthr...-money-is-done

Their gold is worth about $100 billion. They need to borrow over $200 billion a year. https://www.omfif.org/analysis/comme...s-debt-crisis/

The case in the OP in that thread was dismissed in 2017 and no countries are making moves to any gold backed currency. How is that crystal ball doing these days?

[RJB]

So are they going to give it to "the people"?

. They will give "it" to them alright. Although they may not like what it is.

[devil21]

Their gold is worth about $100 billion. They need to borrow over $200 billion a year. https://www.omfif.org/analysis/comme...s-debt-crisis/

Gold is constant value. You can't change the value of gold, though you can temporarily mess with the price until the currency it is denominated in eventually and inevitably fails. So just revalue the gold and pay the debt back with either devalued currency or revalued gold. Theoretically, Italian legislature could declare their gold worth a trillion euros an ounce and hand a debt holder a shiny gram of gold and declare it settled.

The case in the OP in that thread was dismissed in 2017 and no countries are making moves to any gold backed currency. How is that crystal ball doing these days?

Doing quite well actually! Everyone's talking about gold a lot these days, aren't they? Conditioning at its finest.

[Zippyjuan]

Gold is constant value. You can't change the value of gold,

Constant value? So the prices of things relative to gold never change? It is never subject to things like supply and demand like all other things? (all prices are relative- not fixed).

[Superfluous Man]

Gold is constant value. You can't change the value of gold.

Since the value of Gold is subjective, and the value of everything else that you could exchange for Gold is also subjective, this can't possibly be true.

[Superfluous Man]

So are they going to give it to "the people"?

Yes. Good and hard.

[devil21]

Constant value? So the prices of things relative to gold never change? It is never subject to things like supply and demand like all other things? (all prices are relative- not fixed).

Value and price are not the same concept. Gold is a store of value, not a store of price. No one ever said gold is a great store of price. That must mean that value and price are two different concepts. One being much more constant than the other. Guess which is which? Gold and silver are in the bible. Shekels and dollars, not so much.

Since the value of Gold is subjective, and the value of everything else that you could exchange for Gold is also subjective, this can't possibly be true.

Subjective to who? It may be subjective to average Joe on the street but average Joe doesn't control anything so Joe's opinion doesn't mean anything. Banking and religious establishment doesn't think it is subjective. "He who owns the gold makes the rules." That doesn't sound very subjective.

[Zippyjuan]

Value and price are not the same concept. Gold is a store of value, not a store of price. No one ever said gold is a great store of price. That must mean that value and price are two different concepts. One being much more constant than the other. Guess which is which? Gold and silver are in the bible. Shekels and dollars, not so much.

So since they are in the bible and metals and retain their value, their relative prices should be constant. The silver- gold ration should stay the same even if their price in dollars (or euros or pesos or whatever) changes. One ounce of gold should be equal to a certain amount of silver and not change. Does it?

[devil21]

So since they are in the bible and metals, they should retain their value. Their relative prices should be constant if their value does not change. The silver- gold ration should stay the same even if their price in dollars (or euros or pesos or whatever) changes. Does it?

Got a chart that starts before 1975? How about back to 1913 or earlier? It's intentionally misleading to show a chart that only covers the short time period since gold was formally severed from fiat currency. We've seen how quickly a fiat currency with no backing dies without the formal recognition of what is valuable.

[ATruepatriot]

Value and price are not the same concept. Gold is a store of value, not a store of price. No one ever said gold is a great store of price. That must mean that value and price are two different concepts. One being much more constant than the other. Guess which is which? Gold and silver are in the bible. Shekels and dollars, not so much.

Absolutely. The "Purchasing power" of metals remains stable and always has.

In Roman times one once of gold would purchase a decent horse. In the 1800s one ounce of gold would purchase a decent horse. Right now one ounce of gold will purchase a decent horse.

[Zippyjuan]

Got a chart that starts before 1975? How about back to 1913 or earlier? It's intentionally misleading to show a chart that only covers the short time period since gold was formally severed from fiat currency. We've seen how quickly a fiat currency with no backing dies without the formal recognition of what is valuable.

If their value is fixed, their relative prices should stay the same. Since it does not, at least one and probably both are changing in value over time.

[Zippyjuan]

Absolutely. The "Purchasing power" of metals remains stable and always has.

In Roman times one once of gold would purchase a decent horse. In the 1800s one ounce of gold would purchase a decent horse. Right now one ounce of gold will purchase a decent horse.

Link to horse prices in terms of gold?

[Superfluous Man]

Subjective to who?

Everyone. Value is subjective.

[Zippyjuan]

Everyone. Value is subjective.

Exactly.

[ATruepatriot]

Link to horse prices in terms of gold?

History is not your strong point is it? They didn't have the internet back then. lol

Now that's a spin... I know how to do it too.

If you don't already know this, then you have no true economic history about metals. And I don't have 3 hours to waste to educate you.

[devil21]

If their value is fixed, their relative prices should stay the same. Since it does not, at least one and probably both are changing in value over time.

So then no you won't post the chart I requested. What I am obviously saying (and you know this but I'm playing along with you, for the folks at home) is that currencies fluctuate and it is currencies that denominate "price" and the associated paper games denominated in those currencies. It's not a hard concept to grasp. Stop thinking about price and start thinking about value. We can get into the origins of gold and silver's value but that heads off into occultist territory and historical beliefs held by a small, powerful few, as to where gold and silver originate from.

[devil21]

History is not your strong point is it? They didn't have the internet back then. lol

Now that's a spin... I know how to do it too.

If you don't already know this, then you have no true economic history about metals. And I don't have 3 hours to waste to educate you.

Zippy is the resident banker apologist and PR guy. Don't stress over it. He knows all of what we are talking about but it's his job to act like he doesn't.

[Superfluous Man]

So then no you won't post the chart I requested. What I am obviously saying (and you know this but I'm playing along with you, for the folks at home) is that currencies fluctuate and it is currencies that denominate "price" and the associated paper games denominated in those currencies. It's not a hard concept to grasp. Stop thinking about price and start thinking about value. We can get into the origins of gold and silver's value but that heads off into occultist territory and historical beliefs held by a small, powerful few, as to where gold and silver originate from.

It's not just currencies that fluctuate. All the prices of everything else fluctuate relative to one another as well. At one point in time, the amount of Big Macs you can buy for what it costs to get a barrel of oil will be one ratio, and at some other time it will be a different ratio. And it's the same with any two other goods. Not only do prices constantly change, but the relative prices of one thing to another do too.

[Superfluous Man]

History is not your strong point is it? They didn't have the internet back then. lol

Now that's a spin... I know how to do it too.

If you don't already know this, then you have no true economic history about metals. And I don't have 3 hours to waste to educate you.

So you're standing by that horse claim?

Because I'm also skeptical. And the fact that you don't have a source for it doesn't engender confidence in it. What checking I've done just since reading your post doesn't support your claim.

[Zippyjuan]

So then no you won't post the chart I requested. What I am obviously saying (and you know this but I'm playing along with you, for the folks at home) is that currencies fluctuate and it is currencies that denominate "price" and the associated paper games denominated in those currencies. It's not a hard concept to grasp. Stop thinking about price and start thinking about value. We can get into the origins of gold and silver's value but that heads off into occultist territory and historical beliefs held by a small, powerful few, as to where gold and silver originate from.

Posting their ratio ignores what their currency price is and focuses on their relative values. Again, if their value does not change, then neither should the ratio. Since the ratio does change, then their value is not fixed. Perhaps you can post what the ratio was back when the government declared how much they were worth by backing currency with them.

I will share this bit from Kitco which promotes silver and gold:

https://www.kitco.com/commentaries/2...er-Ratios.html

Our documentation of ratios since August 1971 debunks the propaganda that comes from hard-core silver bugs about the metal’s relative value to gold.

From a compendium of sources, the average abundance of gold in Earth’s crust is about 4 ppb while silver is about 70 ppb, for a ratio of 1:17.5. Based on these crustal abundances, silver perma-bulls promote a platform that gold-silver ratios should be less than 20.

Their argument is also based on historic gold-silver ratios from late 1792 to 1890 when there was bimetallic backing of the US dollar and/or attempts to control silver prices with coinage legislation, and a two-month period during the parabolic top of precious metals prices in early 1980.

Ergo say they, the price of silver is constantly manipulated, silver is woefully undervalued, and it is always on the verge of a major breakout.

However, silver aficionados ignore important facts regarding supplies, demand, and uses of the two radically different metals:

Silver is mostly used as an industrial metal (54%); much of that yearly demand is consumed and a relatively minor amount is recycled.

Gold is a precious metal; 90% is used in jewelry and investments and 10% in industrial applications.

An estimated 98% of all the gold ever mined in the world remains available and held in jewelry, by central banks, in private hoards, and as fabricated products (source: USGS).

Cumulative historic world production of silver and gold is estimated from various sources to be about 9.2:1 (1,690,000 tonnes versus 182,000 tonnes).

For the past 11 years, the ratio of silver to gold mined is about the same at 9.0:1 (258,000 tonnes versus 28,600 tonnes from 2005-2015).

About 70% of new silver is a by-product from base metal or gold mines; therefore, silver production is largely dependent on the prices of these primary metals.

I conclude that since August 1971 when gold was partially freed from the US dollar on world exchanges, Earth’s crustal abundances, historic fixed-price relationships, and mine production have had no influence on the gold-silver ratio.

Instead, the relative prices of gold and silver are driven by:

Industrial demand for silver and the vast amount of available above-ground stocks of silver held by hoarders and speculators.
The health of the world economy and geopolitical events.
Central bank transactions and safe haven hoarding of gold.
Speculative traders moving in and out of physical and paper markets of both metals.

[ATruepatriot]

Zippy is the resident banker apologist and PR guy. Don't stress over it. He knows all of what we are talking about but it's his job to act like he doesn't.

I'm starting to enjoy the example of ineptness. The horse example really is a decent one to use when comparing the stability of metal value and purchasing power vrs the fluctuation in value and purchasing power of currency because both have spanned the ages as stable in cost/value. It was shared with me years ago by a professional economist as an example in this very same discussion.

[Superfluous Man]

I'm starting to enjoy the example of ineptness. The horse example really is a decent one to use when comparing the stability of metal value and purchasing power vrs the fluctuation in value and purchasing power of currency because both have spanned the ages as stable in cost/value. It was shared with me years ago by a professional economist as an example in this very same discussion.

Did that economist point to the actual data, or just make the claim?

[devil21]

Nice commentary but it again only reflects the temporary games that can be played with an unrestrained printing press that will eventually and inevitably fail. 45 years is nothing when it comes to determining something's value. Remarkably short-sighted, in fact.

[ATruepatriot]

So you're standing by that horse claim?

Because I'm also skeptical. And the fact that you don't have a source for it doesn't engender confidence in it. What checking I've done just since reading your post doesn't support your claim.

Absolutely... The two have correlated in stable value throughout time.