Thursday, August 18, 2011
San Francisco – On Wednesday Venezuelan President Hugo Chavez confirmed reports that his government is “bringing home” 211 tons of gold currently stored in international banks and that plans are underway to nationalize the entire gold mining industry in the Caribbean nation. In a move aimed at protecting the Venezuelan economy from the global economic crisis, the president also said his government plans to transfer the country’s international cash reserves out of the U.S. and Europe and into Brazilian, Chinese, and Russian banks.
The physical transfer of Venezuela’s international gold reserves, from the vaults of foreign banks to the Caracas-based headquarters of the Central Bank of Venezuela (BCV), will increase the BCV’s gold reserves from the current US$ 7 billion to some US$ 18.3 billion.
According to Chavez, the “repatriation” of 211 of the 365 tons of Venezuelan gold reserves currently held in foreign banks is “a healthy measure for the country” and “an absolutely sovereign decision” that will benefit the Venezuelan people and economy.
Joking about the vast quantity of gold to be transferred, Chavez told BCV President Nelson Merentes and Minister of Finances and Planning Jorge Giordani he could “loan them a basement” at the Miraflores Presidential Palace
According to Finances and Planning Minister Giordani, the decision to return Venezuela’s gold to the BCV “is a question of prudence and protection.”
“We are protecting ourselves from a market that is disturbed,” he said.
As a result of the economic crises spreading across the U.S. and Europe, the price of gold recently hit an all-time high of $US 1,800 dollars an ounce.
Speaking by telephone to the state TV station VTV, Chavez also said that he was reviewing “the laws allowing the state to exploit gold and all related activities ...we are going to nationalize the gold and we are going to convert it, among other things, into international reserves because gold continues to increase in value.”
Venezuela, which produces an estimated 4.3 tons of gold per year, recently changed the laws governing the percentage of gold that mining firms could export. In 2010, it increased from 30 to 50% the amount of gold a company could send abroad, requiring the firms to sell the remaining 50% to the publicly-owned BCV.
“Next week we are going to nationalize gold – all of the gold, for Venezuela. We can not allow them to continue taking it” affirmed the Venezuelan president.
Rafael Ramirez, Venezuela’s Minister of Energy and Petroleum, explained that the Law of Gold Nationalization to be passed by executive decree will not only “bring order” to gold mining in Venezuela but will prevent further “looting” by transnational firms.
In an article published yesterday, Reuters reported that gold mining firm Rusoro produced some 100,000 ounces of gold in Venezuela last year. At a price of $US 1,800, that’s worth an estimated $US 180 million.
“For the first time in history the Venezuelan state will begin to definitively and decidedly control a sector that is completely out of control,” affirmed Ramirez.
The new law will allow Venezuelan people and government, “to prevent the resources from leaving the country” and maintain “a monopoly on the commercialization” of Venezuelan gold.
Speaking to reporters yesterday, Venezuelan Minister of Electric Energy and the next Secretary of the Union of South American Nations (UNASUR), Ali Rodriguez, affirmed that Venezuela’s international financial reserves “run the risk of being robbed” by those governments opposed to his country’s domestic and foreign policies.
Venezuela’s decision to return its gold home is "a legitimate act, a sovereign act, unquestionable and indeed necessary," said Rodriguez.
Earlier this year, after Libya’s $US 200 billion in international assets were “frozen” by U.S. and European powers as part of the NATO attacks, Venezuela’s Chavez called the move “a robbery” by the U.S. and its European allies.
At that time, Chavez asked “where are the international reserves of our peoples? Where are they deposited? They are in the North’s banks, because that is what the world economic dictatorship demands.”
While the United States unilaterally cancelled the direct convertibility between gold and the U.S. dollar in 1971, many national governments still hold significant amounts of gold reserves as a means to defend their national currencies against an increasingly unstable U.S. dollar.
According to Minister Rodriguez, 80 tons of Venezuela’s gold reserve was sent and stored abroad by the government of Democratic Action (AD) president Jaime Lusinchi (1984 – 1989).
Rodriguez, the future head of Latin America’s UNASUR, also affirmed that he would encourage other Latin American nations to “move their reserves to a good safe house” and out of the economically troubled Global North.
In a move aimed at preventing the global economic crisis from further affecting the Venezuelan economy, the Venezuelan government also plans to transfer the country’s US$ 6 billion in international cash reserves, currently held in U.S. dollars, European euros, and British pounds sterling, to banks in Brazil, China, and Russia.For further reading:
"Venezuela formally asks Bank of England to return its gold", Bloomberg, August 22, 2011
"Game Changer – Is Chavez in your Woods, Mr Bear, looking for Gold?", Ben Hinde, August 22, 2011
"Chavez move could drive gold through the roof - and put confiscation on the cards again", Lawrence Williams, August 22, 2011
"Venezuela Brings Gold Home", Charles Scaliger, The New American, August 21, 2011
"Venezuela Moves to Take Over Gold Sector", Wall Street Journal, August 18, 2011