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

Reuters/Shannon
Stapleton

• The deepening economic crisis in Venezuela means its
  government wants to get back its gold reserves worth more than
  $500 million.
• According to Reuters, Venezuelan authorities have
  approached the Bank of England in an attempt to repatriate
  about 14 tons of gold bullion currently held in the bank’s
  vaults.
• The move is thought to be a response to recently
  announced sanctions by the US, which are aimed at disrupting the South American
  country’s gold exports.
• 
  Venezuela is aggressively
  selling its gold reserves to fund attempts to cope with the
  crisis, which has caused widespread poverty and
  violence.
  

The deepening economic crisis in Venezuela means the government
really wants to repatriate its gold reserves worth more than $500
million.

Reuters reported on Monday that Venezuelan authorities have
approached the Bank of England in an attempt to get back about 14
tonnes of gold bullion currently held in the bank’s vaults. It’s
common practice for emerging market governments to store gold
within the central banks of more developed economies. 

Citing two public officials with direct knowledge of the
operation, Reuters said that the plans relate to recently
announced sanctions by the US, which are aimed at
disrupting the South American country’s gold exports.

US President Donald Trump last week signed an executive
order to ban US persons from dealing with entities and
individuals involved with “corrupt or deceptive” gold sales from
Venezuela.

Read more:
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pictures reveal the huge amounts of cash Venezuelans need to buy
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It is unclear whether Venezuela is now in possession of the
gold previously held by the Bank of England, but Reuters reports
that the bank has “sought to clarify” what Venezuela is actually
planning to do with the gold before handing it back.

The Bank of England declined to comment to Business Insider.

Over recent years, Venezuela has been a major seller of
gold, and this year alone has sold around 24 tonnes — worth close
to $900 million — to Turkey. In the past four years, the
country’s gold reserves have decreased from about 360 tonnes to
160 tonnes.

Venezuela selling out of its sizeable gold reserves — which
were built up under Hugo Chavez — has been used as a means of
trying to address the enormous economic crisis plaguing the
country. Hyperinflation of goods means that everyday items are
completely unaffordable for many Venezuelans, and poverty and
violence are widespread.

In August, a report from the International Monetary Fund
said Venezuela’s economy was expected to contract by about 18% in
2018, while inflation is forecast to reach a whopping 1 million
percent.

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