Mario Draghi

Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.

He is not as famous as Mario the plumber, the protagonist of the best-selling video game of all time, but he is one of the most powerful persons in the world. Mario Draghi was born in on September 3, 1947, in Rome. He graduated from La Sapienza University and got a Ph.D. from the MIT in 1976. He worked as full professor in Florence, at the World Bank, in Italian Treasury. Draghi also was a vice chairman and managing director of Goldman Sachs International. He served as Governor of the Bank of Italy and Chairman of the Financial Stability Forum (known today as Financial Stability Board). Finally, since November 2011 Draghi has been the ECB President. His term expires at the end of October 2019, and will be succeeded by Christine Lagarde.

Draghi and Gold
What is the link between Draghi and gold? During his presidency, Draghi had to deal with the European sovereign debt crisis. In July 2012, in the middle of a crisis, he pledged to do “whatever it takes” to save the euro. It was the turning point for the eurozone. The Greek bond yields declined, while the EUR/USD exchange rate stopped sliding and rebounded, as the chart below shows.

Chart 1: EUR/USD exchange rate (yellow line, left axis) and the 10-year Greek Treasury yields (red line right axis, in %) from January 2010 to July 2019.

EUR/USD exchange rate and gold chart

And what about gold? As one can see in the chart below, Draghi’s pledge to save euro supported temporarily not only the bloc’s currency but also gold. However, Draghi’s presidency was generally a bad time for gold, as the price of the yellow metal declined from $1,800 to $1,500.

Chart 2: Gold prices during Draghi’s presidency.

Gold prices during Draghi’s presidency.

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