While the price of gold rises inexorably in response to investors seeking a safe haven in these financially troubled times, the President of Venezuela, Hugo Chavez, is going the whole hog and will nationalise the country’s gold industry.
Gold is now tickling the underside of $1,800 (or maybe £1,100) an ounce and this move by Chavez is designed to help protect Venezuela from the US and European economic problems.
Not only will extraction and processing be nationalised to bolster reserves, but about £6.6 billion in gold held in foreign countries will also be moved back to Venezuela out of ‘prudence’ said central bank president Nelson Merentes on television. Of this it is reported that about £2.78 billion is held in the vaults of the Bank of England.
"We're going to start to bring back our gold to the Central Bank," Chávez said via telephone on the live state television broadcast. While Merentes said "At the time of these disturbances, it's preferable to recover our assets, in this case the gold, and have it here in the vaults"
With a re-election bid in the offing next year this could prove to be a popular move by the socialist president. Some have said that this is a move that ensures the security of the country’s reserves against sanctions should there be violence in their elections next year.
After the government cancelled gold mining concessions for Crystallex International Corp (a Canadian company) in February, the Canadian based but Russian owned Rusoru Mining Ltd became the last remaining foreign-owned company involved in the Venezuelan gold industry.
Chavez, who has recently undergone treatment for cancer in Cuba, is planning for the gold to be converted into international reserves ‘amongst other things’ he said.