Voima Weekly #10 Game of Thrones

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More than ten years ago, I gave a presentation to clients where I replaced the flags of the EMU countries¹ with coats of arms. Instantly, the atmosphere changed – the presentation became more gripping, somehow more laden with real interests. In that talk, I explained how freshly printed central bank money flows into society, first inflating asset prices and later leading to broader inflation.

Let’s continue with a similar thought today: imagine sitting behind one of those coats of arms as the keeper of the treasury – the CFO of a nation. You hold in your hands the balance sheet of the entire economy: its assets and its debts. Across the table you meet the other CFOs, each seated behind their own coat of arms. Everyone has one vote in the meeting, and decisions are made democratically by majority. Almost all of these CFOs are struggling with cash flow. In 2023, as many as 85% of euro-area countries ran budget deficits² – some for decades already, like Italy (since at least the 1980s), and others for “only” a little over ten years, like Finland (since 2009). Altogether, public debt amounts to roughly €12.81 trillion (2023).³ This economic council has chosen the euro as its common currency. Yet every member is in debt – not a single nation is debt-free. Only a few manage to run surpluses, i.e. generate a real profit.

On the table now is a vote:

a) bring cash flow under control and start genuinely reducing debt, or

b) continue as before – running deficits and piling on debt, trusting that more money can always be printed when it runs out.

The first option means strict fiscal discipline. The message would be clear: cuts must be made. Targets would include student aid, housing subsidies, business subsidies, and practically every area of government spending. In some countries, taxes might also be raised. The second option is to keep distributing money to whatever is politically fashionable at the time. More is promised for the green transition, student aid is increased, government budgets are not cut but expanded, and defense spending is boosted — because everyone agrees those need more money. The CFOs glance at their balance sheets... and which path will they choose? Perhaps the answer is already clear: option (a) – discipline and debt reduction – never truly had political will behind it in the first place.

The euro area giants — Germany, Italy, and France — still hold vast gold reserves in their central bank vaults⁴, reserves that continue to rise in value relative to their euro-denominated debt. And then there is small but “brave” Finland: at the end of 2024, the Bank of Finland decided to go its own way and sold 5,000 kilos of gold. The proceeds were directed into expanding the foreign exchange reserves — mainly into U.S. dollars, but also into British pounds and Japanese yen. When the gold was sold, the price stood at about USD 2,589 per troy ounce, or roughly €83,000 per kilo. Today, gold trades closer to €100,000 per kilo. The missed appreciation already amounts to nearly €100 million — in just nine months. What, then, will be missed over the coming decades? And the chosen currencies have offered no consolation: since the start of 2024, the yen has lost -30.5%, the pound -28.2%, and the dollar even -38.9% against gold.

Gold will remain on the balance sheet – but what will remain of the euro’s purchasing power? We have taken a different path: we have already helped households and companies increase their purchasing power by about €100 million. Of course, that is only a drop in the ocean – but it is a good beginning. Fortunately, we still live in a relatively free market economy, and every household, company and institution has the opportunity to make wise choices – no matter what the CFOs decide.⁵

–Marko Viinikka

Founder, CEO

Voima Gold Oy

¹ Countries using the euro.

² Figures are based on Eurostat, national statistical offices and central bank publications for 2023. The budget balance is expressed as a share of GDP, and debt refers to the gross general government debt.

³ https://tradingeconomics.com/euro-area/government-debt

⁴ The largest gold reserves in the euro area are held by Germany (approx. 3,361 tonnes), Italy (approx. 2,452 tonnes) and France (approx. 2,437 tonnes). Source: World Gold Council, Gold Reserves by Country, February 2025 (http://gold.org).

⁵ Author’s reflection: debt itself is not to be feared if there are sensible counterparts on the other side of the balance sheet. In addition, under certain conditions gold sales could be made tax-exempt, as has been done in the United Kingdom and Germany.

Disclaimer: Voima Weeklies are the personal writings of the undersigned. They do not necessarily represent the official view of Voima Gold Oy or any other company, nor do they constitute investment advice or a recommendation to purchase securities.