Chavez Emptying Bank of England Vault as Venezuela Brings Back Gold Hoard
Venezuelan President Hugo Chavez ordered the central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions such as the Bank of England as prices for the metal rise to a record.
“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said yesterday on state television. “It’s a healthy decision.”
Chavez, whose government depends on oil for 95 percent of its export revenue, is looking to diversify Venezuela’s cash reserves from U.S. and European banks to include investments in emerging markets including Brazil, China, India, Russia and South Africa, central bank President Nelson Merentes said yesterday. The world’s 15th-largest holder of gold is bringing back its gold after a 28 percent rally in the price this year.
Venezuela’s reserves stood at $28.6 billion on Aug. 16. Finance Minister Jorge Giordani said that the weakening U.S. dollar, a near-default by the U.S. government and the European sovereign debt crisis threaten Venezuela’s savings and they will be more secure at home and in “allied” countries.
‘Green Light’
The central bank already has about $7 billion of gold in its vaults. Of the country’s liquid reserves, which amount to about $6.3 billion, 59 percent are held in Switzerland, 18 percent in the U.K and about 11 percent in the U.S., according to a government report.
South Carolina (USA) Look at Bringing Back Gold, Silver Coins
South Carolina is the latest state to propose a bill that would allow gold and silver coins to be used as legal tender.On Wednesday, American Principles in Action, a conservative non-profit group, announced that the bill has the official support of the South Carolina Republican Party.
"Article I, Section 10 of the U.S. Constitution specifies that the states shall not 'make anything but gold and silver coin a payment in tender of debts,'" they continued. "With the federal government clearly abdicating its responsibility to regulate the value of money, states across the country are moving to exercise this constitutional power."
More than a dozen other states are considering similar moves.
The state of Utah started the trend earlier this month when it recognized gold and silver coins minted by the U.S. government as money.
Rising inflation and the nation's weak economy is leading to the new focus on gold. Tea Party leaders and conservative economists say using gold would help restrain government spending and keep the Central Bank's power in check.
