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The government of Venezuela is unable to repay a loan to Deutsche Bank and thus loses the gold that was deposited as collateral. It concerns a $750 million loan that the government took out with the bank in 2016, with 20 tons of gold as collateral. According to sources of interest, this exchange would be Bloomberg will not be terminated until 2021, but because Venezuela could no longer pay the interest, the loan has already been settled. That means Deutsche Bank can sell the gold.
The story is not over yet, as the gold is now worth $120 million more than when the agreement with Deutsche Bank was signed. That amount of money belongs to the government of President Maduro, but opposition figure Juan Guaido also claims that money. He wants the money to go to a bank account that is out of the government's reach.
"We are in talks with Deutsche Bank to negotiate the terms under which the difference – which belongs to the central bank – will be paid to the legitimate government. Deutsche Bank cannot risk negotiating with the illegitimate central bank authorities," Jose Ignacio Hernandez, attorney general of opposition figure Guaido, told Bloomberg.
The United States and more than fifty other countries have now recognized Guaido as the legitimate president of Venezuela. The majority of the Venezuelan population supports the democratically elected President Maduro. Nor does Maduro intend to give up his position. He keeps a firm grip on the central bank.
Due to the combination of an economic crisis and US sanctions, Venezuela is finding it increasingly difficult to get money. The domestic currency has become virtually worthless, which means that all imports have to be paid for in foreign currency. Foreign exchange reserves are now at just $7.9 billion, the lowest level in 29 years. In fact, the central bank now has to Selling gold to be able to pay the bills.
Earlier this year Ended Citigroup also has a gold swap with Venezuela. In 2015, the central bank made $1.1 billion worth of gold available as collateral for a loan. That gold was also put up for sale in order to be able to repay the loan and then Juan Guaido also tried to claim the remaining amount.
At the rate at which Venezuela is now selling gold, it won't be long before Maduro's money is really gone. Last year alone, the government sold more than 40% of its gold reserves. Lots of that gold Sold Venezuela to traders in Turkey and the United Arab Emirates.
Venezuela's foreign exchange reserves to lowest level in 29 years (Source: Bloomberg)
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