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ROME, Oct 15 (Reuters) - Italy, whose sovereign assets from bonds to banks have so often been the subject of market crises in recent years, is currently enjoying a windfall as the central bank's vast gold reserves track record-high prices.

The country's bullion stockpile reflects decades of determined safeguarding after it rebuilt reserves plundered by the Nazis in the 1940s, and a stance that has seen it resist calls to sell through repeated crises and as its national debt soared.

The Bank of Italy now sits on the world's third-largest national gold stockpile, behind only the U.S. and Germany. Its 2,452 metric tons of gold are worth an estimated $300 billion at current prices, roughly 13% of 2024 national output, Reuters calculations show.

Italy's love affair with bullion goes back millennia, with the Etruscans mastering the technique of fusing gold beads well before ancient Rome. Under Julius Caesar, the aureus gold coin became the monetary cornerstone of the Roman Empire, and centuries later, the fiorino became as influential in medieval Europe as the dollar is today.

The country's more recent gold policy was shaped by its wartime experience, when Nazi forces aided by Italy's own fascist regime seized 120 tons of its reserves. By the war's end, these had dwindled to around 20 tons.

During its postwar "economic miracle", Italy became an export-driven economy and saw a surge in foreign currency inflows, notably U.S. dollars. Some of these, according to the Bank of Italy's website, were converted into gold.

Its holdings had climbed to 1,400 tons by 1960, including three-quarters of the seized bullion which it was able to recover in 1958.

The oil shocks of the 1970s ushered in further global uncertainty, which in Italy meant social unrest and frequent government changes seen as risky by investors.

"The extreme monetary instability led the central banks of Western countries to buy gold, the ultimate symbol of financial solidity," Stefano Caselli, dean of the SDA Bocconi School of Management in Milan, told Reuters.

To offset budget holes left by capital flight, Rome used 41,300 ingots from its gold reserves as collateral for a $2 billion loan from Germany's Bundesbank in 1976.

But unlike Britain or Spain, Italy has refused to sell off gold during financial downturns, retaining its reserves even through the 2008 debt crisis.

"Gold is like the family silverware, it's like grandpa's precious watch, it's the last resort in times of crisis, any crisis that undermines international confidence in the country," Salvatore Rossi, former deputy governor of the Bank of Italy, wrote in his 2018 book 'Oro' (Gold).

With gold still viewed as a safeguard of last resort by many Western nations, central banks worldwide are again stockpiling amid a reshaping of the global order.

"That historical decision of the Bank of Italy feels strikingly modern," said Caselli. "Because we are back there again."

The Bank of Italy currently holds approximately 871,713 gold coins weighing some 4.1 tons in its vaults, dubbed the 'sacristy' after the room in a church where sacred items are kept.

Gold accounted for nearly 75% of Italy's official reserves at the end of last year, a significantly higher ratio than the 66.5% of the euro zone, according to World Gold Council data.

Around 1,100 tons are stored in the vault beneath the Bank of Italy's headquarters at Palazzo Koch, a short walk from the Colosseum. A similar portion is held in the U.S., while smaller amounts are kept in Britain and Switzerland.

Italy also remains one of the world's top exporters of gold jewellery, with production concentrated in Alessandria, Arezzo, and Vicenza. Luxury brands like Bulgari, Buccellati and Damiani enjoy global acclaim.

Calls to sell gold to reduce Italy's public debt, now over 3 trillion euros ($3.49 trillion) and seen at 137.4% of GDP next year, continue to surface but have not yet succeeded.

"Selling even half of the gold holding would not solve Italy's debt problem anyway," said Giacomo Chiorino, head of market analysis at Banca Patrimoni Sella & C.

Some argue that selling ingots could unlock funding for essential public services to benefit citizens instead of sitting idly in vaults.

Nonetheless, the Bank of Italy shows no intention of selling. It had no comment on its gold policy for this article.

"At a time when the world is being redrawn, market prices have reached unprecedented multiples and (digital assets such as) stablecoins and cryptocurrency are gaining ground, central banks currently hold the hottest asset," Bocconi's Caselli said. "They are right not to sell."

Wall Street’s referendum on Europe

At the glitzy Jumeirah Carlton Tower in London’s Knightsbridge district, some of the biggest names in finance on Tuesday gathered for an exclusive FT get-together.

Apollo’s Marc Rowan and Blackstone’s Jon Gray were joined by the likes of Per Franzén and Rob Lucas, chief executives of European private capital giants EQT and CVC.

One subject that kept cropping up was the twin downfalls of auto subprime lender Tricolor and car parts maker First Brands, and the prospect of contagion in credit markets.

But the conference was also a check-in on the bullishness that’s swept across Europe this year, as institutional investors have recalibrated their exposure to the US amid Donald Trump’s volatile second stint in the White House.

Among C-suite executives who oversee hundreds of billions of dollars, there isn’t a consensus on where Europe stands in the world’s financial pecking order. Even still, they largely see the continent as ripe for investing.

Rowan came out with the hottest take: “Every problem that we have in the US is worse here [in Europe].” 

That’s not always a bad thing for him. Being behind the US also meant that the region would grow faster with respect to private capital investments, Rowan added.

Apollo has already thrown money behind that thesis. In July, the firm agreed to buy UK retirement savings group Pension Insurance Corporation, which Rowan on Tuesday said “will be to the UK market what Athene is to the US market”.

Gray was even more bullish about the US, saying that the “American exceptionalism” narrative was strong as ever.

The leaders of EQT and CVC had a more optimistic view. Franzén and Lucas recognise Europe’s trailing the US. But the fate of their firms is more deeply intertwined with that of the continent, as both are headquartered in Europe.

“Those very inefficiencies that Europe has allows us with all of our resources . . . to find opportunities and add value to them,” said Lucas.

While the US, he argued, had more momentum behind it, Europe’s idiosyncrasies allowed CVC to generate returns from various sectors.

Franzén agreed, adding that across the continent, EQT saw plenty of opportunities to generate “real alpha”.

Even a Switzerland-based institutional investor conceded that allocation to America isn’t going anywhere, despite the political upheaval taking place in Washington and the question marks hanging over the future of the US economy.

“Look, you can’t short the US, that’s just the bottom line,” said Ivan Vercoutère, the global head of private equity for the Liechtenstein’s royal family’s LGT Capital Partners. 

Are the numbers real?

Gold continues to soar because of reasons. One of the most cited reasons of late has been all the central bank buying. Per the ECB in June:

The demand for gold by central banks remained at record highs in 2024, accounting for more than 20% of global demand, in contrast to around one-tenth on average in the 2010s.

But how do we know? You’d think that maybe central bank buying would show up in increases in central bank holdings of gold. And it does, sort of. But the data doesn’t correspond to the headlines.

Central banks’ reported gold holdings have increased by 228 tonnes over the most recent twelve months reported. Is this a lot? It’s the weight of about forty African bush elephants, so objectively yes. But 228 tonnes is actually not that much in central bank purchase terms.

In fact, 228 tonnes puts the twelve months to June 2025 in the bottom quartile of gold purchases over the past five years, 10 years and 15 years.

So why is everyone is talking about unprecedented levels of central bank buying?

It turns out that these reports rely on estimates of ‘unreported’ official gold demand. Add these in and total central bank purchases jump to a whopping 804 tonnes.

And 804 tonnes — as well as being about seven-and-a-half times as heavy as a blue whale — puts the total purchases into the top tercile of the past five and 10 years, and top quartile of the past 15 years.

What even are ‘unreported’ gold purchases? To understand this, we first need to understand the official numbers.

Official central bank gold holding numbers come from the IMF. But reporting to the IMF is purely voluntary. According to the ECB, the “Central Bank of Russia stopped reporting its gold purchases one month before the sanctions were imposed, although it is expected to have been a large purchaser in 2022.” And so the ECB, like the rest of us, turn to the World Gold Council for estimates of ‘unreported’ purchases.

As a reminder, the WGC is the gold mining trade body dedicated to pumping up the gold price serving the gold market and its participants/ making weird videos about Elton John’s kneecaps.

The WGC report total central bank purchases that are far higher than the official numbers. But perhaps conscious of their cheerleading reputation, they have since 2014 outsourced estimates on the demand side to Metals Focus, an independent precious metals consultancy.

Estimating unreported central bank purchases is hard. In fact, this is not actually something they even do — though they do estimate net purchases by central banks and other official sector institutions like sovereign wealth funds.

But with SWF assets under management eclipsing $13tn — around the same size as total central bank reserves — it’s possible that central banks’ gold reserves are pretty much what they report to the IMF, and that gold purchases are built up entirely outside central banks. Maybe we’re splitting hairs.

Furthermore, as the WGC writes in its methodology document:

Given the opacity and complexity of the market, supply and demand statistics are best thought of as estimates, with some estimates being more accurate than others.

Most important statistics, like GDP and the CPI, are estimates. But the process by which they are estimated and aggregated is a matter of public record and subject to scrutiny.

Alphaville doesn’t doubt the level of professionalism and expertise going into Metals Focus numbers. But it’s not possible to interrogate non-public information gathered together from off-the-record conversations with miners, refiners, bullion dealers, etc, about gold flows. And estimates will vary depending on who is doing the estimating.

Back in 1999, and all the way through 2010, the WGC sourced its data from GFMS Thomson Reuters. When it switched data provider to Metals Focus, in order to avoid big jumps in published estimates of demand, they published a hybrid series and smoothed the transition over four years — slowly de-emphasising the GFMS Thomson Reuters data and increasing the weight of Metals Focus data.

We can understand their desire not to spook the market with janky data spikes, but the need to do this highlights quite how much art must go into them.

All that said, putting the gold rally at the door of central bank buying is massively intuitive. Following Russia’s invasion of Ukraine their central bank was sanctioned and its reserves frozen. European leaders are still chatting about whether they can be seized within the current legal architecture. And so it doesn’t take a genius to see that even a shiny pet rock looks a safer bet than electronic IOUs controlled by your enemies/ frenemies.

And it’s in this context that the relationship between the yield on US inflation-linked government bonds — the TIPS yield — and the yellow metal has collapsed:

So we’re not going to rain on the goldbugs’ parade. In fact, given how tinfoil hat goldbugs can get, maybe it’s fitting that at least part of the narrative about the rally is based on statistics that seek to describe opaque backroom chatter rather than official data.

Ex-head of Milan’s anti-corruption unit appealed conviction for withholding evidence in case against Eni/Shell

Anti-corruption campaigners have raised the alarm over legal action against two top Italian anti-bribery prosecutors who led an investigation into Italy’s state-backed Eni and the Anglo-Dutch energy group Shell.

Fabio De Pasquale, Milan’s former deputy general prosecutor and head of its anti-corruption unit, and his colleague Sergio Spadaro led a landmark prosecution over a Nigerian oil deal that ended in the 2021 acquittal of Italy’s state-backed Eni and Shell.

The two men are awaiting an appeals court decision this week, after being sentenced in 2024 to eight months in prison for allegedly withholding evidence favourable to the Italian energy major during the trial. It is highly unusual for Italian prosecutors to be put on trial over the conduct of their investigations.

Campaigners allege De Pasquale and Spadaro are paying the price for attempting to prosecute Italy’s biggest company, in which the state is the largest shareholder.

“While I fully respect the independence of the judiciary, it must be stated in this instance that, even if the facts established by the court reflect the truth, such an error by prosecutors has not, to date, been prosecutable as a criminal offence in any country, including Italy,” said Drago Kos the OECD’s former chair of the OECD Working Group on Bribery in International Business Transactions.

Simon Taylor, the co-founder of NGO Global Witness, which was involved in the case against the oil groups, alleges the case against the prosecutors “stinks of political interference”.

“It is impossible to avoid seeing the targeting of the prosecutors as anything other than a deliberate effort to end investigations of Italian corporations for international corruption,” said Taylor, who now runs Amsterdam-based campaign group Hawkmoth. 

After the prosecutors initial conviction, Italy’s justice minister Carlo Nordio, a former prosecutor himself, said that court cases “like the ones against De Pasquale’s don’t offer a good picture of Italy’s judiciary” and have contributed to the sector’s “loss of credibility”.

De Pasquale and Spadaro rose to prominence in 2012 after winning a high profile tax fraud case against the late premier Silvio Berlusconi, who was forced to leave parliament as a consequence of the conviction. De Pasquale was also the lead prosecutor on the Italian leg of the Qatargate investigation, which examined alleged corruption in the European parliament.

The high-profile international corruption trial against Eni and Shell, which ended in their acquittal four years ago, was centred around an undeveloped deepwater plot off the coast of Nigeria, named OPL 245.

Prosecutors alleged bribes of $1.1bn out of a $1.3bn deal were paid to Nigerian public officials for the licence when it was obtained in 2011. Eni and Shell have always denied any wrongdoing.

Prosecutors relied on thousands of internal Shell and Eni documents seized during the complex cross border investigation. Vincenzo Armanna, a former Eni executive dismissed from the company before the case began, originally testified that he and his colleagues “were aware that a good part [of the price paid for the oil licence] would benefit the political sponsors of the operation”, according to the publicly available case information.

Armanna also claimed tens of millions of dollars in kickbacks had been paid to Eni executives. Such claims were denied by other trial witnesses. Armanna later retracted his testimony claiming prosecutor De Pasquale pressured him to confirm that Eni knew that part of the price paid for the OPL 245 licence would benefit Nigerian officials.

De Pasquale and his colleague Spadaro were accused of having withheld five documents, including a video recording and WhatsApp messages, that undermined Armanna’s initial claims regarding the company’s knowledge of payments, according to records of the court hearings against the prosecutors in the city of Brescia.

Guido Rispoli, the Brescia prosecutor leading the case, declined to comment. De Pasquale and Spadaro also declined to comment.

“A court ruling [against the prosecutors] would imply that any mistake by prosecutors in Italy could be characterised as a criminal offence rather than merely as a violation of procedural rules that might lead to the inadmissibility of evidence or to potential disciplinary liability for prosecutors,” said Kos.

De Pasquale and Spadaro deny any wrongdoing, arguing it would have been unlawful for them to disclose evidence which, at the time, was the subject of the investigation. In court their defence also argued the decision not to include documents in the case file was within their prosecutorial discretion and approved by their seniors.

Taylor’s organisation Hawkmoth together with UK-based anti-corruption NGO Corner House and human rights group HEDA Resource Centre have also urged the OECD’s anti-bribery unit to review the case.

“Shockingly there now appears to be zero interest at the [OECD’s] working group on bribery to look into these matters,” said Taylor. 

Kos said that during his tenure as chair, the working group engaged seriously with states regarding alleged breaches of the OECD anti-bribery convention “that were considerably less consequential and supported by far less extensive information,” Kos said.