At to the lowest degree amongst Hugo Chavez, the old Venezuelan President understood that golden was an of import reserve to aid hedge against the nation's declining stone oil revenues next the Great Recession. But unfortunately for the people of Venezuela, the private who followed him into might after Chavez's mysterious expiry is equally ignorant most finance as well as economic science equally anyone tin be.
But hey, what would you lot await from a old motorbus driver?
Not counting the currency debasement that President Maduro has created which has led to to a greater extent than than a year's worth of hyperinflation from his socialist policies as well as majuscule controls, the Venezuelan dictator also chose to lease the real golden his predecessor had returned to the country. But equally things get got continued to spiral downward, Maduro is beingness forced to sell it outright just to larn around difficult currency to at to the lowest degree pay the armed forces equally civil unrest reaches epic proportions.
It was almost exactly two years ago when a cash-strapped Venezuela quietly conducted its first, little-noticed gold-for-cash swap amongst Citigroup, equally purpose of which Maduro converted purpose of his nation's golden reserves into at to the lowest degree $1 billion inwards cash courtesy of the U.S.A. bank. As Reuters reported then, the motive was simple: convert $1 billion of the country's golden into much needed dollars to fund imports as well as maintain the economic scheme from sinking. However, instead of selling the golden outright, a motion which would get got been met amongst a firestorm of protests from political opponents as well as allies alike, leased it to Citi instead.
Specifically, Venezuela provided 1.4 ane G 1000 troy ounces of golden to Citi inwards central for cash. And piece Venezuela would get got to pay involvement on the funds, it got the fundamental make goodness of beingness able to maintain the golden equally purpose of its unusual currency reserves. After all, the golden was "merely rehypothecated", if solely on paper, the actual physical golden would survive transferred to an unknown vault of Citi's choosing where it would expire an property effectively controlled past times the bailed out U.S.A. ban (there was a brief scare concluding July when Citi warned it would unopen the concern human relationship of the Venezuela Central Bank, which prompted us to inquire if Citigroup was most to confiscate $1 billion inwards Venezuela gold).
While it is silent unknown if Citi did inwards fact confiscate a substantial chunk of Venezuela's sovereign gold, what is worth noting is that fifty-fifty just 2 years ago, Venezuela was inwards far improve economical as well as social kind than it is currently, which ultimately prompted Maduro's selection of picking a swap instead of an outright sale of the country's gold. Now, however, amongst hyperinflation rampant, amongst daily protests, many of which plow trigger-happy as well as deadly, as well as amongst the opposition laid to unleash the "mother of all protests" on Midweek fifty-fifty equally Maduro has ordered the regular army to accept to the streets, the president has far fewer qualms most preserving fifty-fifty the illusion of stability at this point. What he does need, however, is access to dollars, survive it to pay Venezuela's creditors, furnish funds to the cash strapped state-owned unloose energy companionship PDVSA, or simply to pay the regular army which is the solely affair keeping the nation away from a revolution, as well as Maduro from facing a deadly endgame.
Which is why Maduro is most to make what he did 2 years ago, solely on a vastly greater scale, as well as perchance simply sell Venezuela's golden outright. - Zerohedge
However, this intelligence isn't the solely economical calamity for Maduro to hitting the wires today equally Russian Federation has chosen to
seize a Venezuelan stone oil tanker to utilisation equally collateral for the $30 ane G 1000 the nation owes inwards delinquent port fees.
It is estimated that Venezuela has around of the largest stone oil reserves inwards the world, equally good equally untapped minerals that could salve the province from its monetary hell. But amongst Hugo Chavez having nationalized (stolen) corporate belongings as well as equipment from unusual entities several years ago, Venezuela no longer has the skills, resources, or cash to make their means out of debt, as well as hence the Bus Driver inwards Chief is left amongst piffling options but to sell the nation's golden just so he tin remain inwards might a piffling flake longer.