Has Chavez been reading GoldMadeSimple News? And can the BoE deliver Venezuela’s gold?
At the start of the week we wrote a piece looking at exactly where Germany holds its gold and maybe its time it starts moving it back home. It transpires that as little as 5% of its alleged 3401 tons are actually held in Germany, with some 66% held at the NY Federal Reserve. We concluded that if Germany were to actually ask for its gold back it might not like the reply it gets and this goes for all countries that hold their gold outside their own country.
So it is very interesting that Venezuela is doing just that – asking for its gold back from around the world. We wonder whether Hugo Chavez has been reading GoldMadeSimple News this week.
These very interesting developments out of Venezuela today also gives us a rare insight into the current thinking at the very top of international commerce and trade. And the conclusion is that trust amongst the international banks and nation states is falling apart.
Not only has the president of Venezuela said that he is about to decree the government exclusive control over the gold mining, a significant move in and of itself. He has also come out and said that he wants to build international reserves in gold which could prove to be a very important turning point in the gold market.
The importance of the move isn’t in that Venezuela wants gold, it already has 401 tons (100 tons more than the UK), but that it wants to repatriate gold held outside the country back to Venezuela.
At the moment some 211 tons of Venezuelan gold is held outside the country. Some of the gold is held with the likes of JP Morgan, Barclays Plc, Standard Chartered Plc and the Bank of Nova Scotia. It sure will be interesting to see how easily those banks can come up with the actual physical gold deliverable to Venezuela.
But probably most intriguing is that Chavez went out of his way to mention the Bank of England by name, he said:
We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home…It’s a healthy decision.
So the BoE in the next few days will get a note asking for shipment of all 99 tons of Venezuela’s gold back to the country. Now this is where things could start to get interesting – for decades GATA has been pointing out that central banks behind the scenes have been loaning and selling gold that it has in its custodianship.
It is entirely possible that the same bar of physical gold held at the BoE has multiple claims on it. This is why being the first to repatriate your gold is so important, and why this move by Venezuela could start a cascade of other countries to do the same. That’s when we will find out for sure if GATA will be proven to be correct and that the central banks and bullion banks don’t have nearly enough gold they claim to have.
Next up, Germany to ask the NY Fed for its gold back? After all “he who owns the gold makes the rules”.
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- Bank of England losing credibility according to… the BoE
- An introduction to GoldMadeSimple
Link to this article: : http://www.goldmadesimplenews.com/gold/has-chavez-been-reading-goldmadesimple-news-and-can-the-boe-deliver-venezuelas-gold-4880/