From David McWilliams – What happens if Germany says enough?:
On the main road out of Milan to Lugano in Switzerland, the Italian police, under instruction from the Guardia di Finanza, were stopping everyone.
They were searching all cars, trucks and vans for money – actual wads of euros – because ordinary Italians are now moving their money to Switzerland.
They are panicking. This has always been the case in Italy. At the first hint of a financial crisis, they head with their savings up the road to Switzerland.
When a financial crisis moves from the relatively opaque trading rooms of investment banks to the ordinary people, you know you’re in trouble. In Italy we are seeing not just a run on a bank; this is a run on a country…
…we must consider plan B.
Already central banks all over the world are making alternative plans.
They are hedging in the age-old fashion – they are buying gold like never before. Central banks are ramping up their gold-buying as they seek to diversify their reserves away from the euro and, of course, the dollar. South Korea became the latest government to disclose a big bullion purchase, saying that it recently bought 25 metric tonnes, more than doubling its holdings to 39 metric tonnes.
Mexico, Russia and Thailand have also been major buyers in 2011.
This year, governments have almost trebled their net gold purchases, increasing their holdings by 203.5 metric tonnes this year, up from a 76 metric tonne rise last year.
Before this year, governments had on balance been shedding their bullion for two decades, during which gold was seen as a relic, with 1988 being the last year that official holdings increased.
Now all that has changed and will continue to change. In short, other central banks are betting that Gunther will not pay and that something will happen to the euro.