The idea to liquidate Italy's gold in order to fund higher state spending appears to have emerged from Beppe Grillo, the co-founder of Five Star, who last September wrote that "It would allow us to finally put an end to this annoying story about the fact that ‘there is no money’", adding "why do citizens have to sell their necklaces and not the state?”

Something big is happening in the gold market right now, and nowhere is that more apparent than in central banks of emerging economies. Last year was a watershed in the size of official gold purchases, as banks added an incredible 651.5 tonnes (worth some $27.7 billion) to their holdings, according to the World Gold Council (WGC). Not only is this a remarkable 74 percent change from 2017, but it’s also the most on record going back to 1971, when President Richard Nixon brought a formal end to the gold standard. In the final quarter of 2018 alone, central banks purchased as much as 195 tonnes, the most for any quarter on record, according to leading precious metal research firm GFMS.

This intervention by the Bank of England on behalf of the US and UK shows a complete disregard for sovereign gold property rights, and the Bank of England has now literally ripped up a custody gold storage agreement that it had entered into with another of the world’s central banks.

Venezuela’s gold holdings in the Bank of England have jumped after it closed out a gold swap deal with Deutsche Bank, according to two sources, as Britain remains reluctant to release gold held for the troubled OPEC nation.

As a very well informed article in Revue Banque explains, Banque de France’s gold reserves will be “mobilized” in order to guarantee gold/currencies swaps and gold leasing. As of now, only other central banks will be able to use those financial products with the Banque de France, but since it has taken on JP Morgan as a partner (why not a French bank?), this opens up the possibility that, in the future, other international commercial banks may have access to them.

In early November news was placed into the British media (Reuters and The Times) revealing that the Bank of England in London, one of the world’s largest custodians of gold bars on behalf of other central banks, was refusing to allow the withdrawal and repatriation of 14 tonnes of gold belonging to Venezuela’s central bank, the Banco Central de Venezuela (BCV).

IRELAND'S Central Bank has refused to say if it plans to move almost €200m worth of gold bars from the vaults of the Bank of England as a result of Brexit, insisting that any such move would be "commercially sensitive".

The gold reserves have been held by its UK counterpart for a number of years, and the Central Bank has traditionally been coy on the precise details of the reserves, and the terms of the arrangement it has with the Bank of England.

The reasons put forward by official sources in the Reuters and Times articles for why Venezuela can’t withdraw its gold from the Bank of England are clearly bogus. The more logical and likely explanation is that the US, through the White House, US Treasury and State Department have been liaising with the British Foreign office, HM Treasury to put pressure on the Bank of England to delay and push back on Venezuela’s gold withdrawal request.

However, these ‘British officials’ are creating a dangerous precedent that other central bank gold customers of the Bank of England around the world will be taking note of. Similar gold withdrawal requests from other central banks, especially those that hold gold loans and gold swaps and want allocation, could well precipitate a run on the physical gold stored in the Bank of England’s vaults.

Paris has vaulting ambitions to capture a share of the world gold trade from London, reviving its historic role as a top-tier power in the international bullion market.

The Banque de France has teamed up with JP Morgan to offer a full range of swaps, leases, and gold deposits for global central banks and sovereign wealth funds. Global reserve managers will be able to pledge bullion as collateral for deposits or for raising foreign currency on the Paris market.