Italy’s Gold Gamble: Risk to Sovereign Reserves

Under a recent amendment to the 2026 budget, Italian lawmakers from the ruling Brothers of Italy party attempted to declare that the gold held by the Bank of Italy “belongs to the State, on behalf of the Italian people.” Italy holds about 2,452 tonnes of bullion, the third-largest national reserve in the world after the US and Germany.

On the surface, it may read as patriotic rhetoric — the kind of populist gesture a government uses to signal the defence of national wealth. In reality, it’s a thinly veiled attempt to open political access to what is nominally monetary collateral: a last-resort safeguard for a state drowning in debt. Italy’s public debt runs into the trillions of euros, tempting any government under pressure to treat gold as a piggy bank. And with gold at multi-decade highs, the pressure — internal and external — only grows.

The European Central Bank responded swiftly. In a pointed legal opinion, it warned that the proposal could violate EU treaty obligations guaranteeing central-bank independence. The ECB stressed that gold reserves are to be held and managed by the Bank of Italy, not reallocated by political decree.

President Christine Lagarde reiterated a cornerstone of euro-area monetary architecture: a state cannot repurpose central-bank gold for fiscal use. The banks that rely on system trust, the treaties that underpin the euro, and the psychological contract with savers could all unravel if reserves are politicised.

Markets are watching closely. A mere change of control — or an expectation of future sales — could inject volatility into global gold markets. If Italy begins to treat bullion as budget collateral rather than stability collateral, it sets a troubling precedent for other indebted eurozone members.

For gold investors, this is an early warning: sovereign gold can be politicised, and its value as collateral weaponised. When lawmakers speak of “ownership by the people,” they often mean “access by the treasury.” That reframes gold reserves as potential liquidity dumps at a time when supply is historically constrained and global demand remains elevated.

Silver also benefits from this erosion in confidence in fiat-anchored reserves. If sovereign bullion — long considered the bedrock of financial stability — is now in play, privately held metal gains renewed appeal. Silver has long lived in gold’s shadow, but in a world where gold becomes politicised, silver becomes a refuge for those who value true scarcity and decentralised ownership.

Investors should pay attention. This Italian manoeuvre may not succeed — the ECB, EU treaties and institutional inertia all push back — but the discussion alone can prompt a re-rating. When national reserves become political, private metal becomes insurance.

Nor is Italy an outlier. Across the developed world, sovereign debt has surged. With high deficits, unfunded liabilities and political pressure to deliver services, the temptation to treat gold and silver as piggy banks is rising.

This moment is a genuine inflection point. Either central banks and supranational authorities maintain the firewall between monetary reserves and political spending, or we move into a new paradigm where national gold hoards become expendable assets on the fiscal balance sheet. In such an environment, gold and silver stop being mere investments — they become strategic escape valves, wealth that sits outside government reach and outside the digital ledger entirely. That’s why disciplined bullion investors should stay prepared, stay liquid, and treat this political turbulence not as background noise but as a clear signal of what’s coming.