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Venezuela may try to get its gold back

Section: Daily Dispatches

Venezuela May Move Cash, Gold

By Daniel Cancel and Corina Rodriguez Pons
Bloomberg News
Tuesday, August 16, 2011

CARACAS -- Venezuela may transfer billions of dollars in cash and gold reserves held in U.S. and European banks to financial institutions in "allied" countries, opposition lawmaker Julio Montoya said today.

Montoya, speaking on the Globovision network from the National Assembly, said the Finance Ministry wants to transfer more than $6 billion of cash reserves to countries including China, Russia, and Brazil. Of Venezuela's $18 billion in gold reserves, $11 billion is held abroad and could be transported back to Venezuela, Montoya said, citing a document he said he obtained from the ministry.

"We think that China, Russia, and Brazil have asked Venezuela to transfer the reserves to guarantee the loans that the government has received in recent years," Montoya said. "President Hugo Chavez has not yet approved the plan."

Chavez, who says he wants to eliminate the "dictatorship" of the U.S. dollar, has called on Venezuela's central bank to diversify its $28.7 billion in reserves away from U.S. institutions. He has also promoted the expanded use of the sucre, a currency created by the Alba bloc in 2009, for regional trade.

Messages left for officials at the Finance Ministry and central bank seeking comment weren't returned.

... Dispatch continues below ...


Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

A large-scale repatriation of gold reserves and transfers of assets to non-U.S. and European banks may cause borrowing costs to rise over investor concerns regarding the guarantee of outstanding bonds, Asdrubal Oliveros, director of Caracas-based consulting and research firm Ecoanalitica, said.

"The country risk would rise because the reserves are seen as a guarantee of payment for foreign investors," he said. "A repatriation of gold reserves could cloud the transparency over actual holdings."

Venezuela has the highest borrowing costs of all emerging-market countries. The extra yield investors demand to own Venezuelan government bonds instead of U.S. Treasuries rose 9 basis points, or 0.09 percentage point, to 1,184, today at 4:15 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI+.

Venezuela's government may want to move funds out of the U.S. to avoid any possible freezing of funds in the future, said Montoya, without providing more details.

Venezuela sold $4.2 billion of bonds due in 2031 on Aug. 5 with an interest rate of 11.95 percent. The government had previously sold $3 billion of securities with a coupon of 12.75 percent in 2010.

The central bank has also transferred some $40 billion of international reserves since 2005 to a government-run development fund known as Fonden to finance infrastructure projects, including $3.25 billion this year.

China has lent Venezuela as much as $32 billion since 2008 to finance infrastructure and social development projects. The South American country, in turn, ships more than 200,000 barrels of oil a day to China to repay the loan. The government is in talks with both Brazil and Russia for new multibillion-dollar loans, Chavez said on Aug. 11.

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Lewis E. Lehrman on How to Solve the U.S. Debt Problem

Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program.

Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust.
Lehrman says: Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy. We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals, and working people 0 percent at the bank, you are not going to encourage them to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust."

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