CARACAS (Commodity Online) : In yet another bold move, Venezuela’s flamboyant president Hugo Chavez announced nationalization of country’s gold sector and to bring home huge gold reserves worth $11 billion from overseas.
Addressing national Television Wednesday, Chavez said he would soon issue a decree carrying out the nationalisation and added that the recall of the gold reserves is intended to help protect this oil-producing country from the economic woes in the United States and Europe.
He said Venezuela will deposit some of that gold into its international reserves.
Venezuela’s Central Bank said recently that the country has about US$17.9bil in gold out of a total of more than US$28.6bil in international reserves. Chavez said US$11bil worth of the gold is held in other countries.
Central Bank president Nelson Merentes said on television that the decision to move the gold reserves was being taken out of "prudence."
"At the time of these disturbances, it's preferable to recover our assets, in this case the gold, and have it here in the vaults," Merentes said.
Venezuela has nearly US$4.6bil of its gold reserves in the Bank of England, according to a report by Finance Minister Jorge Giordani that was leaked to the news media Tuesday by an opposition lawmaker.
The report said additional Venezuelan gold reserves are held by the U.S. bank J.P. Morgan Chase, British banks Barclays, HSBC and Standard Chartered, France's BNP Paribas and Canada's Bank of Nova Scotia.
As for Venezuela's other non-gold international reserves, officials are seeking "more diversification in countries that have more solid economies," Merentes said.
Venezuela has as much as $12 billion in gold reserves, Chavez said, and "we cannot permit them to keep taking that from us."
The Venezuelan leader said the moves would bring more money and stability to Venezuela.
He mentioned China, saying it has a "shield of protection" against a potential deepening of the international economic crisis.
Chavez has raised the idea of withdrawing Venezuela's reserves from U.S. banks repeatedly in the past.
At a summit in 2008, he urged his Latin American allies to begin pulling their reserves out of U.S. banks, warning of a looming economic crisis in the United States.
Giordani and Merentes, who appeared together on television Wednesday, said they proposed to Chavez that Venezuela's nearly US$6.3bil in non-gold international reserves such as bank deposits and bonds should be reviewed and transferred from U.S. and European banks to countries they consider safer, including China, Russia and Brazil, among other countries in Asia and Latin America.
Chavez also said he would soon issue a decree for the nationalisation of the gold mining industry so that the government can increase control over the gold produced.
The Russian company Rusoro Mining Ltd controls one of Venezuela's most important gold mines in the country's southeast. In February, the government cancelled the gold mining concession of a Canadian company.
"We're going to nationalise gold and we're going to convert it, among other things, into international reserves," he said.
The Russian company Rusoro Mining Ltd. controls one of Venezuela's most important gold mines in the country's southeast.
In February, the government cancelled the gold mining concession of a Canadian company, Crystallex International Corp.
It's unclear how Chavez's new decree differs from a 1965 law that nationalized gold mining in Venezuela. In 1977, the government granted itself exclusive rights for extracting gold.
Chavez said the decree will allow the government to "begin to take over the gold zone," where authorities have periodically carried out operations to evict wildcat miners from illegal mines.
The president said the government aims to fight "mafias" that have been taking some of the country's gold.
