The Italian central bank’s gold holdings are worth about one tenth of the total bailout the country requires, according to October data from the World Gold Council.
12:59PM GMT 10 Nov 2011
Italy holds 2,451.8 tonnes of gold – the third highest of any central bank in the world. Only the US, with 8,133.5 tonnes and Germany, with 3.401 tonnes holds more. The International Monetary fund also has reserves of 2,814 tonnes.
One tonne is the equivalent of 32,150.75 Troy ounces. The gold price is currently at about $1,764 per troy ounce, so one tonne of gold is worth about $57.6m. This means Italy’s total central bank holdings are worth around $141bn (£88.6bn).
According to Gary Jenkins, a fixed income analyst at Evolution Securities, Italy requires $1.4 trillion to fully cover its bail out.
This means Italy’s gold holdings are worth about one-tenth of the estimated total amount required.
The cost of repaying Italy’s debt by 2013 is expected to hit £424.9bn, with the country’s total debt currently standing at about $1.9 trillion.
“China wants gold. Would a gold-for-euro trade make sense?” Douglas Borthwick, managing director of foreign exchange dealer Faros Trading, said. “Italy can repay its debt, but it would need to sell its gold to do so.”
The Portuguese Central Bank holds 382.5 tonnes of gold, while the Spanish central bank has 281.6m tonnes of the precious metal.