End Times and Current Events

Chavez Decision to Recall Overseas Gold Reserves Could Reflect Sanctions Fear| FoxNews.com

By Judson Berger   Published August 18, 2011

Hugo Chavez' decision to recall Venezuela's gold reserves and nationalize the industry could reflect his paranoia about being hit with financial sanctions, analysts said.Chavez and other officials in his administration claimed on Wednesday that the move to recall about $11 billion in reserves stored in U.S. and European banks was being done to protect the country from economic troubles in the developed world. But George Gero, a financial adviser with RBC Wealth Management, said Chavez is effectively moving the assets out of countries "that he considers could freeze his gold."  But Venezuelan state oil company PDVSA was hit with U.S. sanctions in May over its ties to Iran, drawing outcry from Chavez's government. Caracas is also facing legal challenges over its gold operations. By taking gold reserves out of overseas banks and bringing them back to Venezuela, Chavez could be reducing the leverage that other governments and court systems have against his government.  Gero said, calling the announcement somewhat of a "political statement." Chavez suggested as much Wednesday, accusing western governments of "practically a confiscation" of international reserves in the Arab world. According to Reuters, Chavez said Venezuela must avoid that outcome and link its economy to those of Russia, China and other developing nations.Venezuela has 366 tons of gold, which is worth about $18 billion though gold prices hit a new high on Thursday on news of Chavez's decision.  But the move to take gold reserves out of the U.S. and Europe may not have much impact on those countries. Gerald O'Driscoll, a Cato Institute fellow and former economic adviser at the Federal Reserve Bank of Dallas. Rather, he said "it's interesting that he's motivated to do it." He speculated concerns about tensions with the U.S., could be making him "paranoid." "He wants to be judgment-proof, so that means you better not have assets outside your country," O'Driscoll said. "Perhaps he feels there's reverberations coming."   "I think he's realized that gold has become another currency so this is one way of shoring up his currency." . As for Chavez's move to nationalize the industry, both O'Driscoll and Gero said it's a way to raise money, consolidate power and diversify the state economy beyond oil. With oil prices dropping, that hurts Venezuela's ability to repay loans to lenders like Russia and China.Chavez has raised the idea of withdrawing Venezuela's reserves from U.S. banks repeatedly in the past. Chavez said he would soon issue the decree for the nationalization of the gold mining industry so that the government can increase control over the gold produced.


http://www.foxnews.com/politics/2011/08/18/chavez-recalls-gold-held-in-us-europe-amid-plan-to-nationalize-industry/