Venezuela brings home gold reserves

[T-Rex]

Venezuela brings home gold reserves

Up to 160 tonnes of gold, worth more than $11bn, is expected to be repartriated back to Venezuela [Reuters]

A shipment of gold has been deposited in Venezuela's central bank in Caracas after President Hugo Chavez ordered the repatriation of most of the country's bullion reserves from overseas banks.

Cheering crowds lined the streets on Friday as the shipment was escorted by armoured trucks to the bank from the Venezuelan capital's Maiquetia airport, beginning a process that will eventually see up to 160 tonnes of gold, worth more than $11bn, brought home.

Chavez ordered the repatriation of 85 per cent of the country's bullion, which has mostly been held in European and US banks, saying the move would protect Venezuela's reserves from global economic turbulence.

"Here it's going to be safe

- Nelson Merentes, Central Bank president, Venezuela

"It's coming to the place it never should have left. ... The vaults of the central bank of Venezuela, not the bank of London or the bank of the United States. It's our gold," Chavez said on national television.

Nelson Merentes, the president of the central bank, said the gold had come from the UK but did not say how much was in the first shipment, citing security concerns.

'It's a guarantee'

The gold had been held abroad since the late 1980s as backing for loans requested from the International Monetary Fund by prior governments, he said.

Merentes called the repatriation of the gold a "guarantee" for the country.

"If there's some problem in the international markets, here it's going to be safe," he said.

Chavez's opponents have called the plan costly and ill-advised, while some suggested Chavez was acting out of fear that Venezuela's overseas assets could one day be frozen by sanctions, as happened to those of his ally, the late Libyan leader Muammar Gaddafi.

 

[TrMhMt]

Hugo Chavez is a great leader. I respect him.

 

[Tshering22]

The man seems to be smartly working onto something. He's seen the errors of Iran and others and moved on to avoid economic sanctions. Despite his Cold war era perspective of the world even today, this is one smart move he's made.

 

[FairAndUnbiased]

The man seems to be smartly working onto something. He's seen the errors of Iran and others and moved on to avoid economic sanctions. Despite his Cold war era perspective of the world even today, this is one smart move he's made.

Agreed, India is also very smart for promoting gold consumption in its general population. China is doing the same, by promoting gold and silver jewelry for the general populace.

Meanwhile, many Americans are still buying "stocks" and "bonds" denominated in USD, a hyperinflation ready currency that once it bursts, will take their life savings with them.

Go for the gold, always. I'd always rather have a piece of gold than a piece of paper.

 

[Abii]

The man seems to be smartly working onto something. He's seen the errors of Iran and others and moved on to avoid economic sanctions. Despite his Cold war era perspective of the world even today, this is one smart move he's made.

lol Iran has much more gold than Venezuela, wtf you on about?
"Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves... with an alleged 300 tons, big enough to challenge the UK at 310 tons, and more than Spain! "

 

[T-Rex]

Every country should follow this step of Venezuela. The western countries have been calling the shots at the expense of non-Eurpean countries for too long. This was one of the methods of sucking the blood of those countries.

 

[BATMAN]

In history all leaders who decide against paper currency were killed for one or other reasons or their states were invaded.

 

[T-Rex]

In history all leaders who decide against paper currency were killed for one or other reasons or their states were invaded.

Nobody is talking about replacing paper currency, it is a measure to shield one's economy from the effects of the declining dollar.

 

[Khalidr]

A very great move and good measure for empowering nation’s economy..

 

[Chogy]

Here's the problem the gold people don't understand. A nation's currency, and thus, their economy, used to be tied to gold. But there isn't enough gold in the world to even come close to the real valuation of goods and services produced by workers. For example, Ft. Knox, Kentucky, has 4,577 tons of gold, which is all the gold the U.S. government owns in reserve. This is equivalent to 147.2 million oz. troy, or at $1,600 per ounce, 235,520 million $$, or in simpler terms, 235 billion dollars.

This is a tiny, tiny fraction of the USA GDP.

There is no longer any reason, and no longer any mechanism, to tie gold into a nation's wealth, currency, or economy. In the end, it is a shiny metal with no real inherent value.

 

[FairAndUnbiased]

Here's the problem the gold people don't understand. A nation's currency, and thus, their economy, used to be tied to gold. But there isn't enough gold in the world to even come close to the real valuation of goods and services produced by workers. For example, Ft. Knox, Kentucky, has 4,577 tons of gold, which is all the gold the U.S. government owns in reserve. This is equivalent to 147.2 million oz. troy, or at $1,600 per ounce, 235,520 million $$, or in simpler terms, 235 billion dollars.

This is a tiny, tiny fraction of the USA GDP.

There is no longer any reason, and no longer any mechanism, to tie gold into a nation's wealth, currency, or economy. In the end, it is a shiny metal with no real inherent value.

Did you forget industrial gold?

The only solution is to raise the price of gold. That's all. That would instill market discipline and force inflation down.

Let me put it in another way: if you had a bag of gold in Han Dynasty times, you'd find that it had pretty much the same purchasing power as a bag of gold in the ROC days, which will have the pretty much the same purchasing power as a bag of gold today.

Now, if you had Yuan in the ROC days, in a few short years after 1949, you'd be a beggar, since the reevaluation of the currency was 15,000,000,000,000,000,000 pre-1948 Yuan to 1 RMB in the PRC era. The past 60 years were the only time of financial stability in China in the last 150 years.

In the US, that is not so severe; the USD only lost 98% of its purchasing power, rather than 99.999999999999999% of its purchasing power. But it would be ludicrous for anyone to suggest that an investment that loses 98% of its value is safe. Indeed, the RMB is a far safer investment than the USD, which I see going the way of the ROC Yuan.

 

[T-Rex]

Here's the problem the gold people don't understand. A nation's currency, and thus, their economy, used to be tied to gold. But there isn't enough gold in the world to even come close to the real valuation of goods and services produced by workers. For example, Ft. Knox, Kentucky, has 4,577 tons of gold, which is all the gold the U.S. government owns in reserve. This is equivalent to 147.2 million oz. troy, or at $1,600 per ounce, 235,520 million $$, or in simpler terms, 235 billion dollars.

This is a tiny, tiny fraction of the USA GDP.

There is no longer any reason, and no longer any mechanism, to tie gold into a nation's wealth, currency, or economy. In the end, it is a shiny metal with no real inherent value.

If it is of 'no real inherent value' why does the US government own 4577 tons of this worthless metal? Perhaps the US central bank should store valuable goods like the toilet paper as reserve!

 

[Chogy]

The value comes about because of an artificial demand. Like diamonds. Industrial diamonds do real work in industry, but jewelry doesn't do jack except make women feel rich.

Gold has value only because people want it. Let me put it into another perspective... zombie apocalypse time. In a desperate zombie apocalypse, let's say you have food, fresh water, fuel, and ammunition. Your neighbor has a bag of gold. His bag of gold is not going to buy your food from you, unless you are nuts.

This isn't that hard. Yes there are industrial uses for gold, as well as platinum, rhodium, and diamonds, but these are trivial compared to the world-wide artificial demand. The demand for gold existed before industry... just because people liked a shiny and scarce metal.

 

[Götterdämmerung]

We are hostage of the USA and the UK, most of our gold are kept in the US and in London and we can't do anything about it.

 

[vigour]

If you get a chance read the history of the currency how it came into the existence. Till 1970, US allows to get the gold equivalent in amount to the currency; implying if you have $1 million, you can ask from US to give equivalent amount of gold at rate at that time. But in 1970s, US dropped the same and USD is just left with the govt guarantee.

Now you guys are discussing about the importance of the gold in the future in the critical events. If you see the industrial usage of gold, there will be many metals that can replace it easily. The current price is in the consumer perception that it is the safe heaven. It is so because everyone thinks the same.

In hypothetical critical events, lets assume one party(could be country) not interested in dealing with gold and wants exchange of products (similar to barter system); as a result, the importance of gold reserve loose the significance unless other party provide the similar goods in exchange of the gold.

So, today gold is considered the safe heaven because everyone is sticking to the same, but if one dominant party changes the ball game all this gold reserve may turn to be costly in future.