Venezuela’s gold reserves fall to their 50-year low

Venezuela’s gold reserves fall to their 50-year low

In recent years, much has been speculated with regard to the gold reserves of the Central Bank of Venezuela. The country is going through a delicate economic situation. It has felt aggravation due to US sanctions on the Bolivarian government of Nicolas Maduro. He had to dip into gold reserves to request loans from international banks. On several occasions, there have been bullion withdrawals from the bank’s chambers in Caracas. They have left for an unknown destination.

Surprisingly, all this traffic has not been reflected in the official accounts that the Central Bank of Venezuela communicates to the International Monetary Fund. With such data, the World Gold Council prepares its monthly list of reserves in the hands of central banks.

Venezuela has been struggling with economic depression

Thus, despite all these withdrawals of bullion from the central bank’s vaults in Caracas, the numbers published in the list of the World Gold Council do not change. They still amount to 161.2 tons. This is because the International Monetary Fund does not have the power to audit the reserves of central banks. It collects the data they provide instead.

 

The Venezuelan government used gold as collateral to obtain loans from international banks

A certain agency, Reuters, published that the Central Bank of Venezuela has updated the figures. According to it, Venezuela’s gold reserves reduced by seven tons during Q1 this year. The number has thus overall decreased to 98 tons.

The contrast from the official statistics is enormous. The decline has resulted in the lowest numbers in the last 50 years. 

The Central Bank of Venezuela, BCV, held reserves of 350 tons until 2015. Since then, the Bolivarian government began to use gold as collateral to obtain loans from international banks. It lacked cash due to US sanctions that, according to the US, the Venezuelan government continues to skip. Part of Venezuela’s gold reserves were used to import gasoline from its ally – Iran. The government of Venezuela tried to alleviate the fuel shortage caused by the bankruptcy of the state-owned company Petroleos de Venezuela. The company has paralyzed part of its refining network, unfortunately. 

 

The Central Bank of Venezuela does not have access to gold held in the Bank of England vaults

The BCV’s gold reserves were valued at 4,990 million dollars at the end of last June. Thanks to the rise in the metal price, it was almost 200 million dollars more than at the end of December 2019.

The Central Bank of Venezuela has not clarified whether the 98 tons include the 33 tons of gold held in the Bank of England vaults. The BCV does not have access to it since the Kingdom United has recognized Juan Guaidó, the opposition leader, as the legitimate president of the nation.

The Central Bank of Venezuela has tried unsuccessfully to reach an agreement with the British authorities. With that gold, under the supervision of the United Nations Development Program, they strived to acquire food and medicine during the Covid-19 pandemic.

The opposition led by Juan Guaidó continues to accuse Nicolás Maduro of having rigged his re-election in 2018.

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