Switzerland has net imported 35.8 tonnes of gold from Venezuela in January 2016.
This unusually high tonnage must be gold from the central bank of VenezuelaBanco Central de Venezuela (BCV) – that has been swapping metal with banks or simply sold it in the open market.

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Submitted by Koos Jansen, Bullionstar:

Remarkably, after Venezuela repatriated 160 tonnes in official gold reservesfrom 25 November 2011 until 30 January 2012, it started to slowly export this gold to the world’s largest gold trading and refining hub, Switzerland, in 2015. How much unencumbered official gold reserves Venezuela has left is unknown.

Venezuela’s economy is in dire straits. Adding to failing economic policy by the government the country gets nearly all of its export revenue from oil, of which the price has declined roughly 70 % since 2014. Venezuela’s foreign exchange reserves are dwindling fast, from $24.2 billion dollars in February 2015 to $14.8 billion dollars in November 2015, while Inflation is said to be triple-digit and Credit Default Swap (CDS) data shows that traders see a 78 % chance on default, according Reuters. In an effort to avoid catastrophes the BCV has a very strong motive to employ its official gold reserves.

The 35.8 tonnes of gold in question that arrived in Switzerland in January 2016 must be sourced from the vaults of the BCV in Caracas, because Venezuela has no significant gold mine output, according to the US Geological Survey its annual production stands at approximately 12 tonnes, and its citizenry is unable to sell such tonnages. If we look at historic cross-border trade we find that gold export from Venezuela to Switzerland commenced in 2012 with 4 tonnes, followed by 10 tonnes in 2013, 12 tonnes in 2014 and 24 tonnes in 2015. It’s possible the shipments in 2012, 2013 and 2014 were largely sourced from Venezuela’s mine output, but it’s impossible the shipments in 2015 and 2016 were not sourced from the BCV.

From the data provided by Switzerland’s customs department we can compute the purity of the gold traded by using the average monthly gold price and subsequently compare the weight to the value disclosed in the reports. In the chart below we can see that until May 2013 the gold Venezuela was exporting to Switzerland was roughly 80 % pure, this could have been for example doré bars from mines or coin bars from the BCV, while starting from December 2013 the shipments were roughly 99.5 % pure, suggesting the gold came predominantly from BCV in London Good Delivery barsor US Assay office bars.

Switzerland gold import venezuela
Chart 1. Non-monetary gold import Switzerland from Venezuela, the purities are estimates.

There is a vast pool of information on everything related to BCV’s official gold reserves, collected by my colleagueRonan Manly in three extensive blog posts, released on 13 May 2015, 14 May 2015 and 1 November 2015. From these posts we learned, inter alia:

1) By February 2012 Venezuela owned roughly 366 tonnes in official gold reserves, of which 316 tonnes were stored in Caracas – in equal amounts of Good Delivery bars (995 fine or higher) and US Assay office bars (995 or lower) – and 50 tonnes were stored in London.

2) In November 2013 talks started between BCV and Goldman Sachs for a 1.45 million ounces (45 tonnes) gold swap (a dollar loan collateralized with gold), which was expected to be settled at the Bank of England in London. But allegedly a deal was not reached.

3) The topic was renewed in March 2015 when Reuters reported several Wall Street banks were pitching at BCV for a 1.4 million ounces swap to be agreed before the end of April 2015. At the end of April 2015 El Nacional reported Citibank had won the pitch. El Nacional wrote, “the gold will remain at the vaults of the Bank of England” and theVenezuela Analysis wrote, “the value of the gold will continue to appear on the Central Bank’s balance sheet – an advantage that Goldman Sachs denied the in earlier talks”. Implying, the 50 tonnes of gold BCV stored in London was swapped for dollars with Citibank.

4) Manly calculated from the monthly balance sheets published by BCV that Venezuela’s official gold reserves had dropped in March and April 2015 by roughly 61 tonnes in total from 363 tonnes to 302 tonnes. He concluded this decline was not related to the swap deal with Citibank.

5) On 1 July 2015, Venezuelan news site La Patilla published an article titled “BCV exported for pledging [swapping] the gold that Chavez had repatriated”, which described how monetary gold was exported by airplane from Caracas on 2, 3 and 7 July 2015.

BCV

Furthermore, Bloomberg reported on 19 August 2015:

“Cash-strapped nations could trigger further downside price risk as the temptation to sell gold reserves mounts. Venezuela is one such country at risk.” Citigroup analysts Wilson and Doshi said in an 18 August report.

“The problem is most of the Venezuelan gold is located in Caracas,” Aberdeen’s Gutierrez said by phone from London on Tuesday. “No bank is going to take collateral for gold that’s actually held in Caracas.”

On 5 February 2016 Reuters reported BCV was in talks with Deutsche Bank to carry out gold swaps in order to improve the liquidity of its foreign reserves. In addition Reuters noted:

The sources said Venezuela in recent years had been carrying out gold swaps with the Switzerland-based Bank for International Settlements (BIS) in operations ranging in duration from a week to a year. One source said Venezuela conducted a total of seven such transactions.

BIS halted these operations last year, both sources said, as a result of concerns about the associated risks.

Reuters wrote Venezuela’s gold involved in swaps does not enter the market. I beg to differ. Normally, in a swap the gold is sold spot from the client to the dealer in exchange for dollars, while both parties agree to reverse the purchase at a future date at a fixed price. If the gold is physically moved during the swap depends on several factors. Because Venezuela had repatriated 160 tonnes of gold in 2011/2012 this metal left the London Bullion Market Association’s chain of integrity. Hence, Gutierrez stated no bank is going to take gold collateral that’s held in Caracas. When BCV’s 50 tonnes stored in London were already on swap with Citibank, it was forced to bring gold to the bullion banks when it needed additional dollars after April 2015.

It’s not possible to trace exactly how much gold BCV has exported for swap deals, or potentially sales, through foreign trade statistics. Official gold reserves are monetary gold, which is exempt from being disclosed in foreign trade statistics (click this link for a detailed analysis on how monetary and non-monetary gold transfers are recorded in foreign trade statistics and in balance of payments around the world). Whenever BCV chooses to ship any of its gold abroad, for swaps or sales, there are two options with respect to foreign trade statistics, (i) the monetary gold is exported abroad, or (ii) the monetary gold is demonetized in Venezuela and exported abroad. Only in the latter option the gold would show up in foreign trade statistics, as such data solely records movements in non-monetary gold. For all clarity, gold can leave the London Bullion Market Association’s chain of integrity although still being monetary gold, these are separated classifications.

From all sources and evidence presented above actually I think both options are explored. We can clearly see demonetized gold going to Switzerland, but there are also hints monetary gold is exported abroad. Foreign trade statistics by the UK, Switzerland and Hong Kong – the major gold trading hubs – have not shown any gold import from Venezuela reflecting BCV’s declining reserves in March and April 2015 or export in July 2015, meaning Venezuela had probably exported metal invisibly as monetary gold. Needless to say, if BCV would sell any of its gold reserves directly to a fellow central bank, for example the People’s Bank Of China, the related shipments would never show up in foreign trade statistics.

From all information at my disposal I cannot conclude how much gold BCV has on swap or unencumbered in the vaults in Caracas. Surely, Venezuela its official gold reserves are not as much as the World Gold Council portraits. According to the Council BCV still holds 361 as of Q4 2015, though the balance sheet at the BCV website from November 2015 states “Oro monetario 69,147,656,000”, which is worth $11 billion US dollars at an official exchange rate of 0.16, and roughly 296 tonnes of gold at a nine months rolling average gold price of $1,152.68 an ounce (which is how the BCV gold is valued, pointed out by Manly). The 296 tonnes will not be fully unencumbered as bullion banks offer swaps while the gold remains on the client’s balance sheets (/double counting).

Obviously Venezuela is in a tight spot. The country is trying desperately to survive on its last reserves and the bullion banks seem to offer shark deals. How long this can go on is anyone’s guess.

H/t @freegoldsGoldreporter.de 

Koos Jansen

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    • your careful insertion of the term socialist proves to me you are here with an agenda. i see right through it. i see many articles on many sites regarding venezuela and it is clear there is a massive propaganda campaign, in both articles and commenters, to associate the troubles there with “socialism”.

      dictionary.com – socialism: a theory or system of social organisation that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

      no, socialism does not mean you work hard and then give your hard work to others for free. it means that the banking crime syndicate do not control all food distribution, governments, lands, military, healthcare, pharmaceutical, gas/electricity/water companies, etc etc etc, which is what is happening under this fraudulently labelled “democracy”. those assets and essential services belong to the people.

      cut n paste from lexluthor below: “And we are not witnessing a collapse of a socialist system… this is an economic war being waged on Venezuela… ”

      it seems clear that to the bankers gold and silver are enemy number 1, socialism is enemy number 2.

      RESEARCH WHAT SOCIALISM REALLY IS and understand why there is this unrelenting propaganda campaign against it.

       

    • mrbaits,

      my agenda: the betterment of ALL of humanity; the cessation of the plunder of the people’s wealth and hard work; the cessation of the criminal activities of those who control and are effectively destroying the world due to their insatiable greed.

      use that against me if you like.

      “cower from the truth” – what truth did you give? you gave me a one liner accusation as your argument and proof thereof.

      c’mon, surely you can do better than that.

    • Silver nurse… Newsflash.. The glorious leaders of the socialist state of Venezuela literally signed on the dotted line with Goldman Sachs to sell out their people.

       

      Once you decide it is legitimate to empower your government to take from others and redistribute the wealth, it’s only a matter of time before those slippery slopes prove irresistible. Venezuela is merely one example.

    • @GBS

      @silver-nurse

      “All you need to know about socialism and socialist is sooner or later they run out of other people’s money.”

      That is such a tired lame disengenuous quote from thatcher that has been proven wrong. Yes the middle class is running out of money, because the middle class is being squeezed out of existence by the elites that now own everything. Please answer me this question: how much of their personal net worths have ultra wealthy elites like the Rothschilds, Walton’s, Koch brothers, and George Soros have they given up to support this purported “socialist” system. Absolutely nothing, all they’ve done is pilfer the 99.99999% for everything they’re worth.

      Here is an article from bullion bulls canada showing how utterly absurd the wealth distribution has become.

      http://www.bullionbullscanada.com/index.php/commentary/canadian-commentary/26674-the-oligarch-trillionaires-the-real-world-s-richest-list

      This is not socialism, this is serfdom. Socialism is about equal wealth distribution to everyone. I do not personally ascribe to that philosophy but our current system is about as far from socialism as you can possibly get. Anyone who criticizes today’s system as being socialist is demonstrating their unwillingness and or inability to engage in basic objective reasoning and escape from their political dogmatic blindness. I’m thinking more and more that many of these anti-socialist posters are operatives of the elites trying to drum up spport for further privatization and looting of the remaining crumbs of wealth owned by the taxpayers.

      Regarding Venezuela specifically, here is an article from Paul Craig Roberts about how the US and IMF loot all developing nations with their lynch squads.

      http://www.paulcraigroberts.org/2016/02/22/the-evil-empire-has-the-world-in-a-death-grip-paul-craig-roberts/

    • Silver – Nurse, do you think it’s only socialism if it’s done at the apartment building or county level but not at the central government level?

      How about a compromise: Socialism has made Venezuela an easy financial war victim from which to steal their gold in order to prop up stronger (bigger military) socialist type governments that need more gold to hide the worthlessness of their fiat.

    • O-o-ooooh! Can I get in this!!?? 🙂

      Capitalism – which this nation was founded on, holds it’s roots in sourcing cash from others in order to speed up the growth process of corporate growth.  Growth which employs labor, increases productivity through mass production, of which would not be possible from a low cash start up.

      Europe was “The Place To Be” in the 90’s! It’s all I heard about, even had some family members living there for nearly 10 years! (they’re back in America now)… But that party is over.  The countries are in debt due to the low labor participation (my take) and EVEN THOUGH they are a Socialist Union, Unelected BANKERS are running their finances!  Stealing assets from bankrupt members (read Greece & Cyprus), and now TAKING away interest (don’t need your money when they print it in heaps) and banning cash! (the grease of FREE_COMMERCE)

      Silver Nurse, your entitled to your opinions in governance, but FREE CAPITALISM is the most successful system; it led to the RISE of Rome, and since mankind is corruptable, it  also led to its decline through MORAL DISINTEGRATION.  (Read Banker pilfering) – This is where U.S. is headed.

      Banks are raping the world.  All forms of government must root them out, and take over their own currencies again. Governments – regardless of their design, accountable to their people. (that leaves out Communism)

      So, I prefer Capitalism. I don’t blame my system for this corruption, it’s all over the world regardless of your governmental system.  It’s a “Private Elite Coup”  – CLOSE DOWN THE CENTRAL BANKS, AND SEIZE THEIR WEALTH FOR THE PEOPLE OF THOSE COUNTRIES. – That’ll teach them to think twice before trying to spin the world into a Monarchy!

  1. ..or how to steal gold without attacking a country militarily…

    And we are not witnessing a collapse of a socialist system… this is an economic war being waged on Venezuela… Remember the gold-repatriating move by Chavez a few years ago? This is a direct consequence… Do not be so naive.

    • Its not the Gringo’s, or the Jews, to blame, it’s themselves, and  their socialist government.

      Socialism has killed more people, than all wars combined, yet naive people think it can work next time.

  2. Isn’t it funny, more plunder headed to Switzerland…hahaha.

    Here’s some conspiratorial food for thought…all that gold that everyone thought that was going to the chins…and why the chins haven’t declared in fact how much gold they truly have is because it’s still sitting in the f-n bis vaults.

    …to be dispersed at a later date.   Sure it is.

     

     

     

     

  3. We know they were working with Goldman Sachs and this is probably also related to Goldman telling it’s muppet clients to sell their gold.

     

    Apparently Goldman’s job is to enable the leaders of socialist countries to rape the hapless citizens.

     

    Poor muppets… it’s a cruel world… and to think they thought socialism would bring prosperity. It would be funny if it weren’t literally killing them.

    • @SeanKelly  yep, goldman sachs already told everyone gold is going much lower this year. when the price goes down fullfilling goldman sachs prediction then Venezuela can buy their gold back plus make a profit.. is genius. —waiting on price pms to drop next week to all new lows cuz goldman sachs.

    • And when will the people decide they have had enough of the BS? Guess that becomes more difficult when you have allowed yourself to be disarmed.

      You guys can call this whatever you want, the reality is that this is a watered down version of communism, with the dream of going full retard. Gives barry a woody just thinking about it. “For the people”… what a load of crap.

    • @aztecminer

      You read my mind. The difference being that Venezuela is not comprised of diverse cultures or religions like Libya or Iraq. Would be harder to come up with a narrative. I’m sure the war pigs would figure something out though.

  4. Around the world, there are only two types of government.  These are: a form of Fascism called Capitalism; and a form of Dictatorships.

    The “Socialism” fits into the Dictatorships.  Isn’t it obvious that the “Ruling Families”  are operating a form of Fascism via the “Banks”. The World Wide Fascism is reinforced via the “Militarizes” . It has always been this way: look at all of the European Wars; all of the Wars that the fledgling US of A has been involved.

    The problem is the Religious component of the Dictatorships/Fascism.  The War in Syria has brought the use of Nuclear Weapons to the fore.  When the Religious component wants to take over the World as in Islam, then the struggle boils over into the economic system. The other side of the conflict is the Ruling Families don’t want to lose power to the Islamist’s Theocracy/Dictatorship/Fascism.

    Gold is also as indicator of  (1) World Wide Unrest and (2) the turmoil in the “economic systems”.

    Keep stacking!!!

  5. Funny how everyone criticizes Venezuela for giving up its gold because it is socialist. How ironic that pretty much all of the other non-socialist countries have already given up their gold and Venezuela was the last country to be corrupted. But, that’s all “socialism’s” fault.

    • Hey Mark!  I’m not too sure where your going with it… so I’ll paraphrase?

      Your saying Venezuela was “last” to be corrupted because they were fighting the U.S. dollar system, and now they are corrupt because they gave in and sold their gold? (sigh) huuuuhh….

      I’m thinking…They were on board with U.S. in the beginning. (opec), and made a LOT of money working with the “corrupt system” (as you put it) but then…. when the party was REALLY ROLLING with oil and GOLD at their peak, Venezuela got too big for it’s britches and turned on the hand that fed it.  Gold begins falling…. not a biggie, but then oil revenue fell.

      The world doesn’t rotate around Venezuela…. they’re effected by the state of things, and should have used the “good times” to get their fiscal house in order, especially if their biting the hand feeding them.  Now, their bleeding, and no ones coming to help them… as a matter of fact, the western banks dont forget transgressions as quickly as the citizenry.  I’m sure they took advantage of Venezuela’s weakness to deliver an additional ONE_TWO punch to a staggering opponant (you know… just to teach them a lesson for being a traitor)

      REMEMBER- they got RICH from the petro-dollar, and then they became turncoats to that system.  No one likes a backstabber Mark. (it’s not my system, I’m just saying….)

      In this particular case for Socialism…. It IS PARTIALLY to blame.  Had they had a SOLID economic system, they could have weathered this downturn.  But they’re party to the “Socialist Party!” woo hoo! And partying was good…. until the booze is gone.  Now their reaping the hangover.  They should have stored their nuts during the “years of plenty” to eat during the “years of want” instead of giving away gas for free (and god knows what else) – that could have paid down debts and created a surplus!

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