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  • Chavez Announces Plan to Recall Venezuela's Foreign Gold Deposits


    In what is being viewed as a predominantly political move, Venezuelan President Hugo Chavez announced his intention to recall all of his country's foreign gold reserves.

    Last week, the first shipment (more than 200 tons of gold) arrived in Caracas as Chavez supporters danced in the street amid armed soldiers. Venezuela has gold reserves in Europe, Canada, Switzerland and the United States.

    In some circles, the recall is being denounced as little more than an attempt by Chavez to fill his coffers and stir up nationalist pride in advance of the next election. Chavez, however, prefers to cast it as a move to end the "dictatorship of the U.S. dollar." In fact, he even offered to loan the United States money last August at his birthday celebration.

    Some analysts also believe that Chavez, paranoid about being ousted from power, recalled the gold before it could be frozen or seized by foreign powers.

    Chavez plans to "repatriate" all of Venezuela's foreign gold deposits (365 tons of gold worth more than $20 billion) and nationalize the country's domestic gold trade. Because of exorbitant insurance premiums, shipping that much gold across the world is an extremely costly endeavor.

    At home, Chavez is working to nationalize the gold trade. Venezuela extracts more than 20 tons of gold each year, with around half of that unearthed by illegal mining. By stamping out this illegal trade and folding Rusoro (the country's only publicly traded mining company) into its state gold company, Venezuela will significantly increase its gold holdings.