Posts Tagged ‘gold’

Maduro goes to China

Tuesday, September 24th, 2013

Venezuelan dictator Nicolás Maduro went to China, signing over oil exploration and gold mining rights in exchange for foreign currency,

President Maduro told his Chinese counterpart, Xi Jinping, that the main goal of his trip was to further consolidate and expand the strategic partnership between the two countries that late President Hugo Chávez began with Chinese leaders. Chávez died in March after 14 years in power.

The two leaders signed 12 agreements on Sunday, including ones related to a finance fund deal, education, and a joint development between Chinese state-owned oil producer Sinopec and Venezuela’s national oil company. They also signed a cooperation and exchange agreement between China’s space flight administration and Venezuela’s science and innovation ministry relating to remote satellites. No details were given on any of the agreements.

Venezuela President Nicolas Maduro met with China’s President Xi Jinping over the weekend in Beijing and said that China had granted Venezuela another $5 billion credit line

The $5 billion will be invested in the country, through a credit from the China Development Bank (BDC) for the financing of strategic projects in the field of health, science road, transport, technology, industry, electricity and mining, which will improve the quality of life of the Venezuelans.

“With this Bank funding we will develop also the Las Cristinas mine. All for the benefit of our beloved people,” wrote Maduro about the long delayed gold mining project.

Maduro tweeted his trip. He also retweeted this, fromForeign Minister Elías Jaua,

Translation: “The Integrated Citizen Protection System (video surveillance) signed with China will have its first installation in the municipality of Sucre in the state of Miranda!”

It so happens that the governor of Miranda is Henrique Capriles, opposition leader.

Here’s looking at you, kid!

More on Maduro’s Chinese deal at Caracas Chronicles.


Re-enter the gold standard

Tuesday, October 9th, 2012

Ralph Benko, writing in Forbes,
Signs Of The Gold Standard Are Increasingly Emerging…Worldwide

From Latin America, Manuel Hinds, twice Finance Minister of El Salvador, is on record in The Wall Street Journal advocating the classical gold standard. The “Sage of Mexico,” Hugo Salinas-Price, has kept the torch lit both for gold and silver atPlata.com to increasing worldwide respectful attention. Three weeks ago this column noted an elegant work extolling the gold standard emerging from Chile, Axel Kaiser’s Intervention and Misery: 1929-2008.

Europe and India are interested, too.

Ralph quotes Goldfinger, Bond villain extraordinaire; my favorite Goldfinger line, however, is

Gold rush: Chavez to nationalize gold industry

Thursday, August 18th, 2011

As if the news that Venezuela will transfer billions of dollars in cash reserves from abroad to banks in Russia, China and Brazil and tons of gold from European banks to its central bank vaults was not enough to scare away all foreign investment from the country, now Chavez will nationalize the gold industry, including extraction and processing.

Interestingly, Rusoro, the only large gold miner operating in Venezuela is owned by a Russian family,

Venezuela has some of Latin America’s largest gold deposits, buried below the jungles south of the Orinoco river. According to official figures, formal mining in the country produces 4.3 tons a year.

Chavez agreed last year to let gold miners export up to 50 percent of production, from 30 percent previously. The other 50 percent must be sold to the central bank.

But that did not satisfy foreign companies like Rusoro, which said the limits made it much harder for them to secure financing abroad, develop projects and create local jobs.

One victim of the dispute has been a huge but long-troubled project called Las Cristinas. It has been in limbo since the government canceled a development license with another Canadian miner, Crystallex, in February.

Rusoro had expressed interest in Las Cristinas, which has not been developed since the 1980s but has reserves estimated at 17 million ounces. Locals once found a 1-kilo (2.2-lb) nugget there.

But the company’s chief executive told Reuters in an interview in June that it could not take on the project unless the government scrapped its export rules.

The moves will make the finances of South America’s biggest oil exporter even murkier, says The Guardian.

Chavez said the government aims to fight “mafias” that have been taking some of the country’s gold; he may be referring to wildcatters and smugglers in the remote areas of Venezuela.

Imaginary mafias or not,

It’s unclear how the decree is different from a 1965 law that nationalized gold mining in the country. In 1977, the government granted itself exclusive rights for extracting gold.

George Maniere wonders if this is all posturing on Chavez’s part and what the effect would be on the physically-backed gold exchange traded funds (ETFs), while Martin Hutchinson asks, Is Hugo Chavez ahead of the investment curve?

Miguel Octavio watched on TV the three stooges discuss the move,

It was quite comic, if not tragic, to watch the idiotic trio of Merentes, Giordani and Chavez try to explain why they were moving Venezuela’s international reserves. As I have said before, I believe the gold should be in Venezuela, not elsewhere, as a normal policy, the problem is why these clowns are making this move right now. I initially dismissed the news about the reserves being moved, there was not much to be moved besides the gold, which I did not believe would be moved (and was not the main focus of the proposal) But these guys truly plan to move the gold, never mind how much it will cost. Time to worry!

Miguel asserts that the reason for all this gold lust is political,

it is clear (to me, at least) that this is political. Chavez wants to avoid sanctions if…that’s the hard part to guess, but I can only think of two things: US sanctions because of the Iran connection or UN sanctions if the Constitutional order is broken.

You can bet on the second. The gold will take a few months to get here. The timing is perfect! When the Constitutional order is broken, the gold will be here and the reserves will be depleted! These guys have a plan and it goes back to the Jose Vicente interview two weeks ago, Chavez still has doubts about democracy.

Still ahead,

Venezuela faces international arbitration over nationalized gold assets from three companies including Crystallex International Corp. (KRY), a Canadian gold producer whose Las Cristinas mine was taken over by the government in February.

As of the writing of this post, oil is trading at $83.40. Chavez is undoubtedly aware of this; his Bolivarian Revolution is very expensive, and he’s running out of time.

He needs the gold.

Cross-posted at Conservative Commune.

UPDATE,
Commenter Barry Davis,

The more troubling point is why now? What is Chavez planning, or what does he know is about to hit, that will trigger the rest of the civilized world (as opposed to the dictatorships and fellow traveler lead states) to try and freeze the accounts he is moving. Something is up.

UPDATE, August 19,
Linked by Venezuela News and Views. Thanks! Make sure to read that post.

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Ahmadinejad to visit Caracas, Venezuela to move its gold

Wednesday, August 17th, 2011

Chávez and Ahmadinejad to meet in September in Caracas
Caracas and Tehran have established a close relation in recent years

President Hugo Chávez and his Iranian counterpart Mahmoud Ahmadinejad pledged to strengthen political and economic cooperation after they convened a meeting of delegates of both countries that will be held in September in Caracas, the Venezuelan Foreign Ministry said Tuesday in a statement.

In a telephone conversation, the two Heads of State welcomed the progress of bilateral cooperation and “agreed to convene the 7th meeting of the bilateral joint committee (…) in order to broaden and deepen the complementation for the independence and welfare of people,” said the text released by the Venezuelan Foreign Ministry, as quoted by AFP.

A’jad is scheduled to be in New York on September 11.

Hugo’s back in Caracas, from his latest round of Cuban chemo, and looking bloated,

Meanwhile, Venezuela Plans to Move Reserve Funds (emphasis added)

Venezuela plans to transfer billions of dollars in cash reserves from abroad to banks in Russia, China and Brazil and tons of gold from European banks to its central bank vaults, according to documents reviewed Tuesday by The Wall Street Journal.

The planned moves would include transferring $6.3 billion in cash reserves, most of which Venezuela now keeps in banks such as the Bank for International Settlements in Basel, Switzerland, and Barclays Bank in London to unnamed Russian, Chinese and Brazilian banks, one document said.

Venezuela also plans to move 211 tons of gold it keeps abroad and values at $11 billion to the vaults of the Venezuelan Central Bank in Caracas where the government keeps its remaining 154 tons of bullion, the document says.

Interestingly,

Venezuela is unusual among countries of its kind in holding so much gold, with the 13th largest gold reserves in the world, according to the World Gold Council (most of the countries ahead of it are in the G10). But this has certainly served Venezuela well: the consistent rise in gold prices has effectively papered over a fall in its reserves this year, despite high oil prices.
Moreover, for Venezuela, whose government rather remarkably seems to be capable of “losing” $29bn, $5bn is small change.

Why the move?

Analysts said the planned move made little economic or financial sense, since Venezuela would be taking its money out of secure banks in safe countries and putting it in countries that are not as safe and perhaps in currencies such as the Chinese yuan or the Russian ruble, which are not reserve currencies. “It’s a big risk,” said José Guerra, a former official at Venezuela’s central bank. Mr. Guerra said he also had heard about the documents whose authenticity was confirmed to him by Central Bank officials.

Could be that Hugo’s getting more desperate as the chemo continues,

Neither Mr. Chávez’s type of cancer nor Mr. Chávez’s prognosis has been made public. Moving the reserves may signal that Mr. Chávez and his associates could be preparing some drastic political moves—such as canceling elections—that could incur international condemnation and perhaps trigger sanctions.

Therefore – since he knows he’s running out of time, he needs the gold and cash right now.

Miguel Octavio is unfazed. One of his commenters speculates,

Is it possible that they are trying to get these reserves into a place where the new government can’t get at them?

Everything is possible.

Cross-posted in The Green Room.

UPDATE,
Roger Noriega,

This precipitous decision to take Venezuela’s international reserves out of secure accounts in Europe and the United States and move them to China and Russia will likely lead global capital markets to conclude that Venezuela is not a reliable country. Venezuela will no longer have the “international reserves” that are required to sustain any modern economy. The ability of the state-owned oil company, PDVSA, and the Republic to generate capital and attract investment will be seriously affected. And, placing these precious reserves in banks belonging to Venezuela’s biggest creditors in China and Russia may suit Chávez’s friends in those countries, but it is an unacceptable risk for the Venezuelan people.

Why notoriously corrupt leaders would want to get their hands on billions in gold is not a very complicated question. However, it is important to note that one of the reasons cited explicitly by Chávez’s decision document is the possibility that Venezuelan funds or dollar-denominated transactions could be frozen by the United States. Surely, Chávez’s advisors know that U.S. laws allow such sanctions only in the case of narcostates, sponsors of terrorism or mass murderers. We know that Chávez’s brother has pledged an armed struggle to keep power and his army chief has said he would never accept the election of an opposition president next December 2012. But, are Chávez’s would-be successors planning Gaddafi- or Assad-style massacres? If they would go that far, why would they even run the risk of holding a campaign and elections?

The idea that Chávistas would resort to brutal repression or would cancel next year’s presidential elections is unthinkable to many. But, just yesterday, few would have imagined that Chávez and his cronies would have risked the country’s economy and people for his own political advantage and selfish personal interests. If Chavez succeeds in treating the country’s international reserves as a petty cash box or pension fund for his inner circle, Venezuela’s fate will be forfeited to another generation of dangerous leaders.

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