The discussions on gold are sacrosanct, but the real lifesaving asset for ordinary people, in the event of a crisis, remains cash. Let’s not demonize him
The debate on the “ownership” of gold that we are witnessing following parliamentary initiatives by the Brothers of Italy (Malan) and the League (Borghi) is interesting and stimulates further reflection. Which concerns the use of cash. The question I ask myself is: it is sacrosanct to reflect on gold and its implications in this financial economy but it would be equally fundamental to “free” cash from the prejudices that imprison its use. Let’s ask ourselves why there are so many limits on a good that is one’s own? There should be no limits on use and withdrawal of cash; instead, there is always a rule that limits its full and free availability as if it were something to be handled with the utmost care to avoid incurring sanctions or particular attention. Yet, never before has the holding of cash and therefore the withdrawal been free from prejudice. The moment is particular because international tensions and the danger of blackouts or hacking could block usability: we have also seen this recently in those countries where, due to an energy crash, electronic transactions or withdrawals were impossible due to interruption of services at the counters. Those who didn’t have cash were trapped. In short, never before has keeping banknotes available become essential for everyday life. And it is no coincidence that larger withdrawals are being recorded or that the ECB itself has “freed” the supply, after much ostracism.
I was talking about it with my friend Beppe Scienza who, first on cash, and now on gold, has written two precious books. The one in the bookshop today for the Ponte alle Grazie investigations is Gold. Good refuge or trap?. Science does not deny that it can act as a last resort, that is, as a last resort after a major crash with companies and countries going bankrupt, stock markets closed, currencies wiped out; for the rest, however, it dismantles some very widespread beliefs. First of all, that gold is not a bulwark against inflation: sometimes it has worked well or even very well, other times it has been a disaster. For example, those who bought it in 1980 found themselves after almost twenty years with a real loss of 80 percent. Only a fifth of the purchasing power was saved. To defend against inflation, Italian or foreign settlement securities indexed to it are better than gold: BTP Italia, BTP-I, Bund-Ei.
The book also argues against the thesis, also dear to sellers, that gold functions as cash throughout the world. It’s not true, you first need to find someone who buys it in a market that is otherwise not very transparent, because it is not regulated. Beppe Scienza instead highlights a very important characteristic of the yellow metal, little mentioned and almost never underlined, which instead helps to explain its diffusion and acceptance by private individuals and central banks. That is, the fact that gold is an anonymous and untraceable store of value, as well as outside the banking circuit. These are advantages that almost no one explains out of hypocrisy or the prejudice of winking at tax evasion and crime. The tax registry does not show how much gold one owns, nor is there an obligation to report it in the tax return, as in capitalist and non-communist Switzerland. In practice, one can transfer ingots and coins to whoever he wants (a child, another relative or non-relative), without anyone else knowing. And it can do so lawfully without the limits of 5 thousand or 10 thousand euros, set instead for banknotes in euros or even in other currencies (and here we find the connections with the cash issue we were talking about above). Securities such as BTPs or other fixed income securities etc. cannot be transferred in the same way. They are bearer securities, but the securities deposit in the bank is nominative and can only be moved to another nominative deposit. In fact, securities are practically all dematerialized and an untraceable transfer of a property is even less possible.
Gold. Good refuge or trap? It is an excellent book to orient yourself in a discussion that will never lose an ounce of relevance.
