Italy's gold belongs to the people
Posted on: 5 January 2026
Italy's 2026 Budget Law contains a curious provision. The gold reserves held by the Bank of Italy, it declares, "belong to the Italian People". The phrasing is solemn, the capitalisation deliberate. Claudio Borghi of the League party called it "a historic moment". Lucio Malan of Brothers of Italy, Prime Minister Meloni's party, spoke of "the conclusion of a long political battle". The markets did not react. The spread on Italian government bonds remained unmoved. And in that absence of reaction lies everything one needs to know about the nature of this operation.
The provision, in its final form, transfers nothing. The gold remains on the Bank of Italy's balance sheet. Management remains autonomous. European constraints are explicitly preserved in the text itself, with direct reference to Articles 123, 127 and 130 of the Treaty on the Functioning of the European Union: the prohibition on monetary financing of the public sector, the exclusive competence of the European System of Central Banks over reserve management, the independence of national central banks. It is a declaration of ownership that modifies no rights of use, management or disposal. Like putting your name on a car while knowing that the keys, the logbook and the driving licence remain permanently in someone else's hands.
The European Central Bank issued two critical opinions, asking the Italian authorities to explain "what the concrete purpose" of the provision might be. It received no answer, because the answer would have made explicit what everyone already knows: the purpose is not concrete. It is symbolic. And in saying this one is not diminishing the operation; one is identifying the terrain on which it actually operates.
For British readers unfamiliar with Italian political dynamics, some context is necessary. The right wing coalition currently governing Italy, led by Giorgia Meloni's Brothers of Italy alongside Matteo Salvini's League, has roots in eurosceptic movements that once advocated leaving the single currency. Those positions have been largely abandoned since taking power in 2022, but the rhetorical infrastructure remains. Gold ownership has been a recurring theme: the idea that Italy's reserves, the third largest in the world after the United States and Germany, should be under direct government control rather than managed by an independent central bank. The argument runs that elected representatives embody "the People" more authentically than unelected technocrats.
The provision that emerged from this year's budget negotiations is a compromise that gives the rhetorical victory without the operational substance. The original amendment stated that the gold "belongs to the State". The ECB objected twice. The final version says it "belongs to the Italian People" and includes explicit reference to European treaties. Economy Minister Giancarlo Giorgetti negotiated directly with ECB President Christine Lagarde. The result is a law that changes nothing in practice but allows the declaration of a "historic victory".
Anyone who has observed technological transitions over the past four decades will recognise the pattern immediately. When a system exhausts the resources to act on the material plane, it begins to consume resources on the symbolic plane. It is the substitution of function with narrative, a mechanism as old as politics itself but now amplified by the speed at which perceptions crystallise into social facts. The government had no fiscal room to distribute tangible benefits; it had full availability of semantic space. The people's gold costs nothing to the budget, produces newspaper headlines, forces the opposition to defend unpopular positions. It is pure arbitrage: the purchase of consent at zero cost.
The comparison with the historical precedents invoked by the majority reveals the nature of the operation by contrast. Roosevelt's Gold Reserve Act of 1934 actually nationalised American gold: it transferred ownership from the Federal Reserve to the Treasury, raised the price from $20.67 to $35 per ounce, devalued the dollar by 59 per cent. It was real monetary policy with measurable economic consequences. Germany, between 2013 and 2017, repatriated 674 tonnes of gold from New York and Paris to Frankfurt: a logistical operation with stated objectives of building domestic confidence and maintaining operational capacity in international trading centres. Actions within the system, not declarations about the system.
Italy in 2026 is neither nationalising nor repatriating. It is declaring an ownership that already existed de facto in a form that changes nothing de jure. The difference is not one of degree; it is one of category.
Some argue that the provision will nonetheless produce a beneficial psychological effect on Italian savers. The argument rests on an improper application of the endowment effect theorised in behavioural economics: by declaring that the gold is "yours", one would shift the axis of confidence from the spread, an anxiety generating abstraction, to the gold reserve, a reassuring tangibility. But the endowment effect requires something more than a declaration: it requires interaction, perceived possession, capacity for action. The Italian citizen cannot see that gold, touch it, exchange it, use it as collateral for a loan. They can do absolutely nothing with those 2,452 tonnes of yellow metal. The people's gold remains an abstraction just as much as the spread it is supposed to neutralise. The difference is that the spread bites when it rises; gold reassures only as long as it is not needed.
This is the critical point that purely legal analysis misses. The provision is technically inert, but clinical realism teaches that perceptions are facts. If a sufficiently large mass of citizens comes to believe that this gold is truly a guarantee against external constraints, the political pressure to "use" that metal in moments of crisis will become unsustainable. Not for the Bank of Italy, which has the Treaties to protect it, but for the very legitimacy of the central bank's technical independence. The risk is not the transfer of ownership; it is the erosion of consent towards the institutional architecture that makes such transfer impossible.
It is like installing a warning light on a dashboard that illuminates to confirm the engine is "the driver's property", without the cable actually being connected to the engine control unit. The operation does not increase power nor improve maintenance; it serves exclusively to manage the operator's anxiety. But if the operator, trusting the light, begins to ignore the real signals of malfunction, the damage becomes concrete.
The ECB knows this, and in its opinions raised precisely this concern: an "ambiguous rewording" of ownership could "open the way for the political use of gold, creating a dangerous precedent across the eurozone". The diplomatic language conceals a precise warning: you are playing with flammable material.
The real strategic value of the provision is not economic but positional. It is a flag planted in territory that the European architecture considers neutral. It changes nothing today, but it alters the semantic landscape for the next crisis. When the spread returns to bite, when debt servicing becomes politically unsustainable, someone will be able to say: "But the gold belongs to the people, the law says so". And at that point the discussion will no longer be about what is possible to do, but about what is legitimate to prevent. It is the difference between a provision that operates and one that prepares the ground.
For those who must make strategic decisions in this context, the implication is clear: this type of signal must be decoded for what it reveals about the direction of domestic political consent, not for its immediate economic effects. Consent is shifting towards narratives of sovereignty in a context where real sovereignty is constrained. This tension between aspiration and constraint is structurally unstable.
The next six to twelve months will tell whether we are looking at a strategy or episodic noise. The indicators to monitor are three. First: requests for independent physical audits of the reserves, not merely accounting ones. If they emerge, it means that distrust of technical institutions is becoming operational. Second: proposals to issue bonds guaranteed, even nominally, by fractions of the "people's" reserve. If they appear, the architecture is becoming dangerously creative. Third: rhetoric about physical repatriation of gold deposited in New York, on the German model. If it materialises, the transition from symbolic to operational is underway.
In the absence of these signals, the provision will remain what it is: political theatre that consumes attention without producing effects. But theatre has its own function in the economy of consent. It allows the declaration of victories in the absence of resources to achieve them. It allows the frame of debate to shift from "what can we afford" to "what belongs to us by right". It allows, above all, the construction of expectations that one day someone will have to satisfy or betray.
Meanwhile, the 2,452 tonnes of gold remain where they have always been: in the vaults of Rome, New York and London, recorded on the balance sheet of an independent central bank, managed according to rules that no budget law can modify. They belong to the Italian People, says the provision. But what "belong" means when you can neither see nor touch nor use nor dispose, is a question the law prudently leaves unanswered.
Perhaps because the answer would make evident that we are witnessing something more subtle and more common than a battle for sovereignty: we are witnessing the design of perceptions in the absence of capacity to design infrastructure. It is the way power operates when material resources are exhausted but the need for legitimation remains intact. It is not new, not Italian, not even particularly sophisticated. But it works, at least until the distance between symbol and substance becomes impossible to ignore.
That moment will come. It always does. And when it comes, the warning light on the dashboard will continue to illuminate, indifferent to the fact that the engine has stopped.