Venezuela wants to recover $550 million in gold from London

The government of Venezuela is said to be planning to spend $550 million on Gold Bars from the Bank of England. Two different sources Stated told Reuters that the South American country is worried about new sanctions, which could make it more difficult to retrieve the gold.

Venezuela's foreign exchange reserves have fallen to an all-time low due to the fall in oil prices and the ensuing economic crisis. Also, the U.S. sanctions against Venezuela's banks are taking their toll, as they make it more difficult for the government to get dollars. Last week, new sanctions were added, targeting the country's gold sector.

Venezuela wants to retrieve gold

This Latest sanctions against the gold sector are an additional reason for Venezuela to withdraw precious metals from the Bank of England. It would involve 14 tonnes of gold bars, which would be used against the current Gold price represent a value of approximately $550 million.

The removal of gold is not yet an easy operation. Reuters reports that Venezuela has been trying to retrieve the gold for two months, but that it has not yet been able to find a party willing to insure the transport of valuables. Transport costs would be particularly high.

The repatriation is also being delayed by the Bank of England, because it does not want to release the precious metal just like that. According to Reuters' sources, the central bank would have asked what Venezuela plans to do with the gold. The British central bank and that of Venezuela are refraining from commenting for the time being.

Economic crisis

The people of Venezuela have been plagued by an economic crisis for five years now. Inflation has risen to more than 400,000% year-on-year, which means that the money there is now virtually worthless. Due to hyperinflation, there is a structural lack of food, medicine and other basic services.

According to President Maduro, this crisis is the result of economic warfare against his country, but many economists think otherwise. Venezuela's economy relied almost entirely on oil exports, a source of income that dried up in 2014. In the meantime, the country was dependent on imports for many products, which had to be paid for in foreign currency. The foreign exchange reserves ran out and then the printing press was turned on to finance the import of goods.

Gold as a last resort

Tapping into the country's gold reserves seems to be a last resort, but it turns out that it is not so easy to put into practice. Like many other non-Western countries, Venezuela does not control a large part of its gold reserves. Hugo Chavez, Maduro's predecessor, has already withdrawn part of the gold stock from the United Kingdom with a lot of publicity. However, part of it is still in the United Kingdom.

Venezuela's gold reserves have already shrunk from 364 tonnes in 2014 to just 160 tonnes at the time of writing due to economic problems. This year, the country has already collected 20 tonnes of raw gold from its gold mines Sold. This went through Turkey instead of Switzerland, because the government feared possible sanctions.

This contribution was made from Geotrendlines