Why would Italy sell their gold now? They know that gold is the only thing on the balance sheet that will retain value. When priced in the Euro it has nowhere to go but up. As the value of their paper reserves fall, the value of their gold rises. Take it to the extreme and their paper is worthless while their gold goes to infinity. No, Italy will hold on to their gold thank you, as well as Greece. They will hold until gold reflects its true value in currency terms. Then the gold can be tapped. Not now when gold is priced as if the actual supply is on the order of 100 times greater than it actually is.
Many have suggested that Italy should sell its substantial gold reserves in order to pay down some of its debt and avoid a sovereign debt crisis. We view such proposals as ridiculous, due to the magnitude of Italy’s debt relative to the value of its gold holdings. However, one such proponent of such a transaction is Gunther Krichbaum, a lawmaker in German Chancellor Angela Merkel’s governing coalition and he is also the Chairman of the Committee of the Affairs of the European Union. The German Bundestag has proposed that Italy sell its sizeable gold reserves in order to lower its debt, implying that Italy’s gold reserves are relatively high and could be used to pay off their sizeable debt. The same suggestion has been put to Germany in the past and it was met with an emphatic rebuttal.