When one thinks PIIGS, one usually imagines countries with collapsing economies, 50%+ youth unemployment, and current account deficits so large they are about to drag down the ECB, Bundesbank and Germany. And while that is absolutely correct for the most part, there is one product which the PIIGS, or in this case Italy, are all too happy to export in size. Gold, and not just to anywhere, but to that ultimate safe haven - Switzerland. From BBC: "Italian exports of gold ingots to Switzerland have soared in recent months, data has shown. Exports to Switzerland were 35.6% higher than in February 2011 "mainly because of sales of non-monetary raw gold", statistics agency Istat said. This followed a 34.6% year-on-year rise in exports to Switzerland in January." And the absolutely funniest attempt at spin ever:
"Experts say improvements in the trade deficit could be a sign that Prime Minister Mario Monti's economic reforms are starting to take effect."Uhm, when the country is exporting the only real asset it has for when it will need to backstop its own currency following the inevitable collapse of the EUR, this is not exactly a sign that the country's reforms are taking effect, but rather that everyone else in Europe is stockpiling the precious metal in advance of "some" event, which is coming.
In the meantime, and closely related, as we posted two months ago, another soaring Italian export... are bank deposits.
Monday, April 16, 2012
At Least One Italian Export Is Soaring: Gold
Tyler Durden from the blog Zero Hedge:
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ReplyDeleteWhy is Italy selling its gold? The gold they have in reserve could serve them as a backbone if they leave the EU or if the EU fails and separates completely. If they do leave the EU then they could issue gold bonds to help alleviate the pain from the austerity and depreciation they would certainly face. While experts claim this to be beneficial now from policy, it may be the wrong move in the long run. Gold is the safest asset a country can hold in times of uncertainty and economic stress. It is always liquid and buyers are plentiful. While the Italians may need to sell some now to pay bills, they certainly should keep enough in the coffers for the storm on the horizon.