Venezuela Repatriates ‘People’s Gold’

http://www.resourceinvestor.com/News/2011/11/Pages/Venezuela-Repatriates-Peoples-Gold.aspx

Excited crowds lined the roadside waving big Venezuelan flags and chanting "It's returned! It's returned!" as a convoy of soldiers and armored cars carried the gold ingots from Maiquetia airport to the central bank in Caracas.

The President of the central bank, Nelson Merentes, traveled into the city at the head of the convoy. He did not say how much gold bullion was brought back in Friday's shipment but said the bullion came from several European countries.

Drums and sirens sounded out across the square as many in the crowd sang "Forward comandante!" in support of the president. Some waved homemade signs that said: "The gold has returned thanks to Chavez!" and "Long live our sovereignty!"

Chavez addressed the nation on local television last week with the Council of Ministers, the Executive Cabinet and representatives of the Venezuelan Central Bank, including bank chief, Nelson Merentes.

Speaking from the Miraflores presidential palace Chavez said the move was giving back the country’s, “Body and soul,” and went on to say the return of the gold gave Venezuela more independence from what he described as imperialist powers. While brandishing a copy of the constitution he explained that the Central Bank would carry out the repatriation.

Chavez said the central bank would now be independent of foreign powers and subject only to the national constitution.

Chavez announced the repatriation in August as a "sovereign" step that would help protect Venezuela's foreign reserves from economic turmoil in the United States and Europe. Most of Venezuela's gold held abroad is in London.

"The gold is returning to where it was always meant to be: The vaults of the Central Bank of Venezuela."

“It’s our gold. It’s the economic reserve for our kids. It’s growing and its going to keep growing, both gold and economic reserves,” said Chavez. “Venezuela is going to become an economic power, not for the bourgeois or capitalism, but for the Venezuelan people.”

A central bank report released in August showed that Venezuela held gold reserves with the Bank of England, JPMorgan Chase & Co., Barclays Plc and Standard Chartered Plc among other banks.

Merentes said in August that Venezuela will look to deposit some of its $6.3 billion of cash reserves in emerging-market financial institutions in Russia, China and Brazil.

Chavez often accuses previous presidents of selling off Venezuelans' national assets, including by storing most of the country's gold reserves with Western banks in the mid-1980s.

Chavez is worried about Venezuela's foreign reserves being frozen by sanctions.

By repatriating the bullion, he also reduces the risk of any seizure of assets related to arbitration cases, including those linked to the nationalization of multibillion-dollar oil projects run by US multinationals.

Critics have suggested that Mr Chavez is acting out of fears Venezuela's overseas assets could one day be frozen by sanctions, as happened to his friend and ally, the late Libyan leader Col Muammar Gaddafi.

Chavez, the Venezuelan central bank and some of its people clearly understand the value of gold.

This is in marked contrast to the majority of people in the western world who have forgotten gold’s “historic,” “symbolic” and “financial” value.

With increasing systemic and monetary risk, gold is reasserting itself as money and as an important safe haven monetary asset.