The World Gold Council released a report last week that found a strong majority of Italian business leaders and citizens agree that the Italian government’s gold reserves are extremely important and have a positive role in the nation’s economic recovery. This is why a very small amount of Italians agree with selling off its gold reserves.
The report titled “Gold as an alternative to austerity” discovered that only four percent of business leaders and citizens support the idea of selling its gold reserves. However, more than half (52 percent) of citizens and nearly two-thirds (61 percent) agree with using the national gold reserves rather than selling it.
These results were compiled through an Ipsos-MROI survey of Italian citizens and business leaders in March.
One option being put out there is to use the gold as a security for the issuance of new sovereign debt. According to various independent studies on this topic, it is agreed that it would generate approximately four to five times the sales value of its gold reserves. At the same time, it would reduce the interest rate Italy pays to borrowers by several percentage points.
“This report underlines the significant level of support among the Italian population for a renewed focus on growth and a rejection of austerity, sending a very clear message to the new government,” said Natalie Dempster, Director of Government Affairs at the World Gold Council, in a news release. “It’s also clear from the research that people believe Italy’s national assets should be working harder. One way to achieve this would be a controlled programme which uses state-owned infrastructure, gold and shareholdings to stimulate economic growth.”
It was noted in the WGC report that Italy has used its gold in the past. In 1974, the Bundesbank provided Italy with a $2 billion bailout, but Rome put up its gold as collateral. The Bundesbank, the Swiss National Bank (SNB) and the Bank of International Settlements (BIS) gave Portugal about $1 billion between 1975 and 1977, but Lisbon pledged an unspecified percentage of its gold reserves. India conducted the same measures for a loan from the Bank of Japan in 1991.
In the Monday morning trading session, gold is up $2.10 at $1,466.30.
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