Venezuela asks Bank of England to return $550 million of gold

Lloyd Doyle
November 7, 2018

Venezuela's foreign exchange holdings have significantly declined since the already-imposed U.S. penalties banned the country's government from borrowing cash on worldwide markets.

Reuters today reported yesterday that Venezuela has approached the Bank of England about getting back approximately 15 tons of gold bullion held in the bank's vaults.

Maduro answered Bolton's comments during a televised speech, saying Venezuela is now certifying 32 gold fields. The Bank of England and the Venezuelan Central Bank did not respond to a request for comment from Reuters. Their offical source only clarified that plans to move the gold had been held up for almost 2 months because of insurance difficulties.

"They are still trying to find insurance coverage, because the costs are high", the source told the agency.

Venezuela is in its fifth year of recession with annual inflation at more than 400,000 percent, leading to increased incidence of hunger and disease and spurring an exodus of some 2 million citizens. His critics blame the country's state-led economic model, stringent exchange controls and nationalizations of private companies. According to Maduro, the Venezuelan government is in the process of certifying 32 gold fields which would turn Venezuela into "the second largest gold reserve on Earth". Lack of hard currency can create shortages of basic goods ranging from staple foods to drugs and automobile parts.

Maduro, along with his economic team, announced that Venezuela is installing 54 gold processing plants with new technology to reportedly avoid the polluting use of mercury.

As a reference, in the first nine months of 2018, Venezuela sold 23.62 tonnes of gold to Turkey for about $900 million.


Selling the gold directly from the Bank of England to a foreign buyer would be logistically easier than shipping it, but could also risk running foul of sanctions.

While it might seem odd for one country's gold to be held elsewhere, apparently it's quite common for governments from "emerging-market" countries to store their gold in the banks of countries with a more developed economy. In the past four years, the country's gold reserves have decreased from about 360 tonnes to 160 tonnes.

But some of Venezuela's gold remained in the Bank of England.

Since 2014, Venezuela has been using its gold as collateral to get billions in loans from worldwide lenders.

In 2017, such swap agreements became hard due to US sanctions, which blocked USA financial institutions from bankrolling any new financing operations.

According to an October article in the Financial Times, Venezuela and its state oil company PDVSA have defaulted on almost all their commitments to bondholders over the past year and are now billions in arrears on their combined traded debt of about $60 bln.

Other reports by Iphone Fresh

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