Global InterGold shares about Venezuelan gold reserves

An unidentified source at the Venezuelan Central Bank leaked information, recently confirmed, stating that Venezuela has put at risk its gold reseves as the country is in dire straits. What have been the plans of Venezuela and how can it affect gold?

Last March an unofficial source at the Venezuelan Central Bank informed Reuters news agency regarding ongoing negotiations between the Central Bank of Venezuela, Bank of America and Credit Suisse.

These negotiations regarded a possible gold swap which would consist of 1.4 million troy ounces of Venezuelan gold in exchange for $1 billion from Citibank - a bank from United States owned by Citigroup Co.

According to the daily Venezuelan newspaper El Nacional, on 24 April the operation was finally confirmed by the former central bank director Jose Guerra and other economists, although both the central bank and Citibank officials have neither reported nor confirmed it officially yet.

The gold swap has a deadline of four years after which gold reserves would return to Venezuela. The gold reserve will remain in the vaults of Bank of England as a guaratee, and it will stay there if the Venezuelan central bank doesn't pay back the loan by Citibank on time. A group of experts have already calculated a rate between 6% and 7% for the swap operation.

The importance of gold is certainly high in this country as under former President Hugo Chavez served to abandon the relation between the bolivar and the dollar by converting two thirds of Venezuela's international reserves in gold. The change between 2007 and 2009 moved away this percent of assets from the dollar.

Then, why the current President Nicolas Maduro has given gold in guarantee? The cash provided by Citibank will help the governemnt guarantee the compliance with the commitments derived from foreign debt including coupon payments of $700 million this month, besides the maintaining of welfare programs in the nation, according to another unofficial source.

It should also be taken into account the situation of the country: scarcity of basic products with soaring prices, which in addition worsened in the last months due to low international oil prices. Thus, gold has served the country once more, but the government must take the right measures so it can return the loan and not lose the gold reserves.

Global InterGold will keep you informed about the latest movements in the gold market worldwide and the benefits of this precious mineral for you to make the best decision when creating your own gold reserve and protect your capital.

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