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Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%

Tyler Durden's picture


While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:


And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every "developed world" banana republic near you.


and just as we (and Kyle Bass) have warned - this is what happens to the nominal price of a stock market as currency wars escalate... how do those US investors who flooded Venezuela with cash feel now? bringing back those VEF gains is going to hurt...

The chart above is a free lesson in nominal vs real: the hardest lesson for some 99.9% of the world's population to grasp. One person who certainly knows how to devalue a currency in real terms FDR, whose 70% devaluation of the USD courtesy of executive order 6102, is merely an appetizer of what is about to be unleashed upon the US.

From Bloomberg:

Venezuela devalued its currency for the fifth time in nine years as ailing President Hugo Chavez seeks to narrow a widening fiscal gap and reduce a shortage of dollars in the economy.


The government will weaken the exchange rate by 32 percent to 6.3 bolivars per dollar, Finance Minister Jorge Giordani told reporters today in Caracas. The government will keep the currency at 4.3 per dollar for some products, he said.


A spending spree that almost tripled the government’s fiscal deficit last year helped Chavez win his third term. Chavez ordered the devaluation from Cuba, where he is recovering from cancer surgery, Giordani said. Venezuela’s fiscal deficit widened to 11 percent of gross domestic product last year from 4 percent in 2011, according to Moody’s Investors Service.


The move can help narrow the budget deficit by increasing the amount of bolivars the government gets from taxes on oil exports. While a weaker currency may fuel annual inflation of 22 percent, it may ease shortages of goods ranging from toilet papers to cars.


In the black market, the bolivar is trading at 18.4 per dollar, according to Lechuga Verde, a website that tracks the rate. Venezuelans use the unregulated credit market because the central bank doesn’t supply enough dollar at the official rates to meet demand.


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Fri, 02/08/2013 - 17:46 | 3227279 debtor of last ...
debtor of last resort's picture

Wonder how much gold he took with him to Cuba. Fiat is a cancer, bitchez.

Fri, 02/08/2013 - 17:48 | 3227289 Dre4dwolf
Dre4dwolf's picture

Im sure everyon who lives there can now expect a 50% raise in pay to be able to afford the 50% rise in costs of living.


Just like in America where everyone got a 25% raise to be able to afford the 25% raise in cost of living.


ooooo..... wait....

Fri, 02/08/2013 - 17:54 | 3227300 Central Bankster
Central Bankster's picture

I was looking at emerging market bond funds for a couple of clients last week.  I saw that the fund held bonds from Venezuela and I thought to myself, "how long until that fascist Chavez devalues the currency overnight, pass".  Shows how these things sneak up when everyone feels complacement.  Needless to say, I warned them away from purchasing a fund stupid enough to buy Chavez bonds.

Fri, 02/08/2013 - 18:25 | 3227330 Yen Cross
Yen Cross's picture

Perhaps you should change your (emoticon). You seem to be a man(woman) with a conscience?

  In any case, you're readable...

Fri, 02/08/2013 - 17:57 | 3227313 IridiumRebel
IridiumRebel's picture

Fuck Yeah! Nuke photos! EVERYBODY DIES!!!!!!!!

Fri, 02/08/2013 - 18:04 | 3227336 Yen Cross
Yen Cross's picture

I/R kicks ass.  IridiumRebel    Tells it like it is!

Fri, 02/08/2013 - 18:26 | 3227342 IridiumRebel
IridiumRebel's picture


















I love you

Fri, 02/08/2013 - 18:01 | 3227326 Melson Nandela
Melson Nandela's picture

well with this news maybe i can get a fill of of short 903 bernanke bucks for the there is no future contract on /TF. 

Fri, 02/08/2013 - 18:02 | 3227329 Venerability
Venerability's picture

Not official yet. But strong rumors that Blackrock now owns more than 5 percent of HNR.

Many of us think Pertamina or someone else will take out the entire company, not just Petrodelta, at about $23 a share, the fair valuation now.

For Pertamina, even the Houston headquarters would be smart - a Western Hemisphere launching pad for closer ties to US support and capital.

Fri, 02/08/2013 - 21:43 | 3227894 disabledvet
disabledvet's picture

I like the way you think...

Sat, 02/09/2013 - 19:01 | 3229444 Venerability
Venerability's picture

It's official. They own about 6 percent.

And although it occurred rapidly in stealth fashion, stock price printed at 14.50 overnight.

That is either the price Trapped Warrant-less Shorts have to cover at now.

Or it's the price Market Makers are getting for signficant blocks of shares from Institutional buy-ins.

Or both!

As we know, it also corresponds with the MINIMUM valuation of the Petrodelta deal, minus virtually everything else in the company.

Curb your enthusiasm, because this is still a Farce, not a Market. But lookin' good.

Fri, 02/08/2013 - 18:10 | 3227350 zerotohero
zerotohero's picture


Fri, 02/08/2013 - 18:14 | 3227362 tradewithdave
tradewithdave's picture

The Pirate Bay documentary is up.

Fri, 02/08/2013 - 18:20 | 3227376 Village Smithy
Village Smithy's picture

Just yesterday on the most relevant blog site in the world! Take special note of the part about "first mover advantage". Tyler rocks it day in and day out.

Fri, 02/08/2013 - 18:25 | 3227390 Hedge Fund of One
Hedge Fund of One's picture

Again?! Didn't they de-value by 50% only 2 or 3 years ago to screw foreign devils who had believed .. er .. invested in Venezuela? Thought it funny that when I linked to this article, the context ad was for - they do "got a lotta nice girls there!" in that part of the world.

Fri, 02/08/2013 - 18:35 | 3227407 Yen Cross
Yen Cross's picture

  Who is they? I'm getting a Spanish slant?  You won't be (be/headed) for sharing some ideas on Z/H.

Fri, 02/08/2013 - 18:40 | 3227414 falak pema
falak pema's picture

krugman is enamoured with compettve deval; he says US do same. If the whole world goes this way there will be no winners; not even the penguins.

Fri, 02/08/2013 - 19:10 | 3227423 NuYawkFrankie
NuYawkFrankie's picture

A common enuf math mistake.... but the actual devaluation rate is 31.7 % and NOT 46%


QED: (6.30 - 4.30)/6.30 = 2/6.30 = 0.317 or 31.7%

The error arises in using the OLD rate (4.30) as the divisor - thus not accounting for the extra 2 units (6.30 -4.30) of newly created devalued curreny.

In simpler terms, a devaluation rate of 46% - close on 50% (ie. it now costs TWICE as much)- would bring 4.30 closer to a new exchange rate of 8 and not 6.30 ;)

Fri, 02/08/2013 - 19:13 | 3227491 Tyler Durden
Tyler Durden's picture

Nope. Also, a devaluation of nearly 100% would bring it to $8. Not 50%.

Fri, 02/08/2013 - 19:15 | 3227493 valley chick
valley chick's picture

Tyler ...can you check the address for the article for it is showing 32 percent...don't know if the article was updated and not the address. ;)

Fri, 02/08/2013 - 19:57 | 3227610 Yen Cross
Yen Cross's picture

 Check it yourself/ You self serving douchebag! Tyler has better things to postulate!

Sat, 02/09/2013 - 10:46 | 3228531 valley chick
valley chick's picture

You talking to me Yen? WTF..was trying to help and let Tyler know.  Obviously you can not read as it was directed at Tyler and confident that he does not need you as a mouthpiece to speak for him.

Fri, 02/08/2013 - 19:22 | 3227515 NuYawkFrankie
NuYawkFrankie's picture

I think you'll find that a devaluation of anything by 100% will bring it to ZERO.

Fri, 02/08/2013 - 19:33 | 3227534 falak pema
falak pema's picture

lol, some people need to go back to simple rule of ratios.

6.3/4.3 = 1.465 So this is an increase of 46% in value of USD to Ven.

1/1.465 = 0.683 So this is a decrease of 31% in value of Ven to USD. 

One way up, the other way down. A ratio has two  realities.

Fri, 02/08/2013 - 20:35 | 3227645 NuYawkFrankie
NuYawkFrankie's picture

Say the 1913 USD was 100c and the 2013 USD is only worth FIVE 1913 cents.

How much has the 2013 USD devalued realtive to the 1913 USD?


I say 95% (we wont quibble about the fraction)

You would say (95/5) *100 = 1,900%

Alernatively, I might have been "imbibing" too much.

Regardless Mr 'T'  thanks for providing the opportunity to post on the best financial/politico site on the net - bar none. Great job ;)

Fri, 02/08/2013 - 23:48 | 3227899 disabledvet
disabledvet's picture

"same oil...a lot cheaper." God help them if this kicks off a hyperinflation ala Brazil in the 80's.

Sat, 02/09/2013 - 15:13 | 3229002 W74
W74's picture

I got a devaluation of 46.514%

Fri, 02/08/2013 - 19:07 | 3227475 Rustysilver
Rustysilver's picture



A percentage increase or decrease in a value is calculated with respect to the intial value not the final value.

Fri, 02/08/2013 - 19:08 | 3227481 DaveA
DaveA's picture

Soon enough, regular Americans will learn what every Turkish, Indian, and Vietnamese citizen already knows: Don't keep your savings in government paper, or bonds payable in such paper. That way, when a government devalues its currency unit, all it's doing is giving pensioners and civil servants a pay cut, which does in fact make the country more competitive.

What if the government mandates that all savings be kept in government paper? Savers won't comply, even if the penalty is death:

Sat, 02/09/2013 - 15:07 | 3228993 W74
W74's picture

Wouldn't it be great if El Bernak was torn to pieces by a mob suddenly cognizant of it's decreased purchasing power and lowered standard of living?  Good article, thanks.

Fri, 02/08/2013 - 19:18 | 3227505 mendigo
mendigo's picture

Currency manipulator!

Can we start bombing someone now?

Fri, 02/08/2013 - 19:26 | 3227527 Lost Wages
Lost Wages's picture

"There is no currency war. Japan is right to fight deflation by lowering yen. It's actually good for world growth." - Larry Kudlow, Twitter, Today

Obviously this is a sound economic decision by a brilliant leader. Monday Kudlow can get down on his knees and worship Chavez.

Fri, 02/08/2013 - 19:42 | 3227572 rogeliokh
rogeliokh's picture

"Japan is right to fight deflation by lowering yen."

Actually YEN is no where near so called "LOW" USDJPY monthly pivot at (147 + 75 /2 )= 111 and 200 MA on Monthly at 108..

200 MA on GBPJPY is at 180, current price 146... Worried about High Yen??? Bullshit.. Japanese YEN no where near

Middle of it's long term range and just recently come off ALL TIME HIGH (ALL TIME LOW to other currencies)..

Fri, 02/08/2013 - 21:52 | 3227909 disabledvet
disabledvet's picture

spot on. that yen is a case study on why large chunks of the US economy can be broke in a matter of weeks. Governors have a lot of power in the USA you "break the American bank" at your own peril.

Fri, 02/08/2013 - 20:45 | 3227544 just-a-girl
just-a-girl's picture

Slack global demand is leading to currency devaluations.  Good thing the US doesn't rely on export demand. 

The US worker gets their paycheck from government demand for their goods and services so there is no need to worry about being a competitive exporter. 

As long as the Fed keeps buying Treasury debt issuance, we can all sleep soundly.


Fri, 02/08/2013 - 19:32 | 3227549 rogeliokh
rogeliokh's picture

Yeah, time to some "technical analysis" people come up with Resistant and Support Levels!!
Hello!!!! Anybody out there??? Guess not... :)))) LOL

Fri, 02/08/2013 - 19:41 | 3227569 JR
JR's picture

“A deadly decision was made in late 1999 that assured the demise of the nation, questioned by few, never having sat well with those in possession of an active economic brain stem. The discharge of the bulk of US factories to Asia, mostly to China, sent the legitimate income producing capability away, only to be replaced to a deeper dependence upon asset inflation.” –Jim Willie

Market Oracle today introduces its diamond article by Jim Willie, Shock Year 2013 - Pitched Currency War Among Central Banks, with Willie's  case for why “the crux of the non-US$ trade vehicle devised as a USDollar alternative will be the Gold Trade Note, as follows:

Friend of gold Jim Sinclair, and executive to a mining firm with interests in Tanzania, put it so well. He captures the theme of this article when he said, "It is the constant drop in the dollar's usage as a contract mechanism internationally. No one sees this but it is the Hammer of Thor on the head of the dollar." The rejection of the USDollar in global trade will mean the end of the abused privilege in a currency turned toxic. Its rejection is the marquee event in the financial world for 2013, following isolation. It is unstoppable and all-encompassing, certain to have geopolitical consequences, as it alters the economic and financial landscape in harsh ways much like a band of violent marauders brandishing machetes alter the neckline of their victims. See the Tonton Macoute in Haiti. The greenback is cornered; it is done.

Here are a few excerpts from Willie’s article, a must read. It begins:

“The central bankers and sovereign wealth fund managers are running scared. The Official Monetary & Financial Institutions Forum (OMFIF) is a forum of central banks, sovereign funds, financial policy makers, and market participants. It recently issued a report on the global monetary system, emphasizing the possibility of a major breakdown in international monetary relations as a result of the currency wars, which hinder productivity. It accepts that the present system is collapsing. It argues a formal role for gold is required to play in international finance. But they turn to the despised corrupt savage callous Intl Monetary Fund, and its broken currency vehicle, the discredited discarded SDR basket. They will be swept aside despite eyes partly open."

Says Willie: "The Competing Currency War has reached a new elevated fever pitch, with the major central banks delivering powerful damage to each other while defending themselves...

"The world is slowly coming to the realization that only a Gold Standard can cure the world of its financial cancer from metastasized paper insecurities... Gold is the ultimate currency."

The Jackass call is that "2013 will see the USDollar finally isolated and put in a position for rejection."

Says Willie:The New York and London bankster crowd cannot dictate Gold's new role, when their vaulted gold supplies are being vacated to points in Asia, when their vault contents are demanded in official accounts for return, when their past gold shipments have been contaminated with tungsten. These banksters are being outed as criminals.

“The end to US & UK hegemony is coming. It will arrive like a grand lasso cast around the set of trade partners seeking a fair system. Their proffered solutions will be ignored, like the QE lunacy in the United States and the ESM lunacy in Europe, both discredited totally. The IMF will not play a role in the next chapter. The irony is thick and inescapable. If the Anglo bankers insist on NOT considering, using, and relying upon Gold as a currency of utmost validity, robustness, and strength, then the rest of the world will devise a system for trade settlement that will evolve toward gold itself. The settlement of trade will not therefore pass through either the banking system or the currency marts...

Willie predicts that “the Gold Trade Note will act much like a Letter of Credit, serve as a short-term bill, and maybe even push aside the near 0% short-term USTreasury Bills that litter the banking landscape.”

Fri, 02/08/2013 - 20:14 | 3227665 Hulk
Hulk's picture

Scary fucking shit man. But one would have to be blind to not see this coming...

Fri, 02/08/2013 - 22:00 | 3227928 disabledvet
disabledvet's picture

i didn't see this coming. sure there's a black market rate in Venezuala...where isn't there? slowly "the pro-9/11 cabal" is being obliterated. that would be ANYONE who thinks "there's a shortage of oil out there." not saying the price at the pump is coming down anytime soon of course. sure would be nice though. start buying!

Sat, 02/09/2013 - 07:56 | 3228409 css1971
css1971's picture

Um. You do realise that the headlines will read "Who could ever have forseen?"

Sat, 02/09/2013 - 02:38 | 3228292 gwar5
gwar5's picture



Sat, 02/09/2013 - 02:36 | 3228293 gwar5
gwar5's picture

Hey, you had me at 'Jim Sinclair'...


I can only figure the US and EU are sucking up to the MB and a new radical sharia Caliphate in MENA because they are desperate to keep oil settling in USDs. Won't matter.

MSM has been criminally silent on the BRICs relentless pursuit of an alternative WRC. Obama was totally humiliated and cast aside on his recent Asian trip where he basically crashed their meeting to propose his own currency cooperation agreement. China basically told him to fuck off, he and his USDs were not welcome in their future trade scheme.


Sat, 02/09/2013 - 02:36 | 3228294 gwar5
gwar5's picture

Hey, you had me at 'Jim Sinclair'...


I can only figure the US and EU are sucking up to the MB and a new radical sharia Caliphate in MENA because they are desperate to keep oil settling in USDs. Won't matter.

MSM has been criminally silent on the BRICs relentless pursuit of an alternative WRC. Obama was totally humiliated and cast aside on his recent Asian trip where he basically crashed their meeting to propose his own currency cooperation agreement. China basically told him to fuck off, he and his USDs were not welcome in their future trade scheme.


Sat, 02/09/2013 - 02:36 | 3228295 gwar5
gwar5's picture

Hey, you had me at 'Jim Sinclair'...


I can only figure the US and EU are sucking up to the MB and a new radical sharia Caliphate in MENA because they are desperate to keep oil settling in USDs. Won't matter.

MSM has been criminally silent on the BRICs relentless pursuit of an alternative WRC. Obama was totally humiliated and cast aside on his recent Asian trip where he basically crashed their meeting to propose his own currency cooperation agreement. China basically told him to fuck off, he and his USDs were not welcome in their future trade scheme.


Fri, 02/08/2013 - 19:54 | 3227605 Yen Cross
Yen Cross's picture

 The Huff and Fuckington  post is looking for handouts today!

Fri, 02/08/2013 - 19:56 | 3227609 goldenbuddha454
goldenbuddha454's picture

Goin looooooong that  Arg. Peso/Ven. Bolivar trade.

Fri, 02/08/2013 - 20:01 | 3227626 Yen Cross
Yen Cross's picture

 Have fun with it. South America is the most insestuious place to trade on " Terra Firma"...

Fri, 02/08/2013 - 19:59 | 3227618 JeremyWS
JeremyWS's picture

Just to clarify if it hasn't been done so already but the USD appreciated 46% vs. VEF but the VEF depreciates 32% vs. the USD. 

USDVEF went from 4.3 -> 6.3 // (6.3-4.3)/4.3 = 46% BUT

VEFUSD went from (1/4.3) -> (1/6.3) or from 0.23.. -> 0.158 therefore (0.158-0.23)/0.23 = 32% fall. 


Fri, 02/08/2013 - 21:05 | 3227792 alfbell
alfbell's picture



I think a cool thing to do (as an American citizen) would be to go "global mobile" and surf the currency wars. Just keep moving to the country where the USD has the most purchasing power and gets the most bang for the buck. Live well, live cheap. And just keep moving to whichever country serves that purpose. I remember when I was in Mexico City about 20 years ago. Breakfast cost me 25 cents/USD. A 3 course lunch or dinner was $1.50/USD. I remember once when in Venezuela 6 of us went out for dinner in a very nice restaurant and had a 3 course meal (steak, prawns, lobster) and alcohol, were waited on hand and foot by 3-4 waiters, there was live music too (a pianist) and I think the total bill came to $11/USD. I remember 3 course lunches and dinners in Bogota for $2/USD as well.

Fri, 02/08/2013 - 23:38 | 3228105 chindit13
chindit13's picture

Cheap places have a way of becoming wildly expensive, leapfrogging everything between their blighted past and unrealistic hopes for the future.

Case in point (other than Moscow, Delhi, Mumbai RE):  my previous Port of Call

Go back to 2000, and a piece of land just at the edge of the city could be had for about $250.  The land measured 24'x50', which is the traditional sized lot to build a six-story, twelve flat poorly-cured concrete and rusty re-bar apartment.  Thirteen years later that same plot sold for $141,000, or the equivalent of over $5 million per acre.  Over the same period per capita income has "skyrocketted" from about $75 per year to $300 per year.  Hello Emerging Middle Class!

Anything special about this plot?  Well, it's neck deep in tropical vegetation, is home to its own ecosystem with rats and Russell's vipers, sits just meters from a gray-water creek (Proud [Typhoid] Mary Creek) that is a mixture of one half household sewerage and one half rain runoff, with a generous sprinking of household garbage on top almost thick enough to walk across the creek's thirty foot width, and the plot itself is sufficiently fluid so that even in the dry season one's feet sink in a few inches if one has the courage to traverse it.

Once the new owner builds that 12 flat superstructure---this term is accurate because buyers get merely a concrete shell and must do all internal "decorations", such as partitions, plumbing, wiring, flooring, etc. themselves---he will sell apartments for an average of about $28000 apiece.  Buyers will be landlords for the most part, putting in an additional $3-5000 in fixtures such as non-grounded electricity, single sheet 1/8th inch pressboard or plastic partitions, and a decorative hole in a portion of the kitchen which will feed the aforementioned proximal creek.  The shower will be a cement cistern, to be filled whenever both the water and power are running at the same time, and serving as an upscale breeding ground for both malaria and dengue mosquitoes.  The floor will be a large, poorly cut sheet of linoleum laid atop the original cement.  Cooking will be on a renter-supplied habachi burning homemade charcoal or biochar.  The room will rent out at about $95/month, giving the owner about a 3% yield.  An extended family will share the flat and rent, with the term "extended" meaning those of the same species, as in The Family of Man.  The walls, if the owner did not paint them in either Puss Yellow or Diluted Pee Green (both from the recently debuted "Third World Collection" of Sherwin Williams), will be adorned with 3'x5' colorful posters of either white babies or Britney Spears.  Those posters will cover most of the mold that grows during the monsoon season as water seeps through the concrete wall from the outside.

Just for background, banks pay 13% on deposits, and the "local money market" sets rates at 5% per month.  Yes, per month, same as China's shadow banking system.

So why does the owner purchase and rent this place when he can put the money in the bank or become a loanshark?

Capital gains, baby!  Lazlo Birinyi's ruler is everywhere.

Fri, 02/08/2013 - 23:40 | 3228141 Muppet Pimp
Muppet Pimp's picture

Always enjoy your insight Chindit.  Long time no see man, you are missed around here.

Sat, 02/09/2013 - 03:38 | 3228317 IridiumRebel
IridiumRebel's picture

This is why I am investing in real estate. Wonderful post.

Sat, 02/09/2013 - 10:57 | 3228593 Vooter
Vooter's picture


Sat, 02/09/2013 - 14:48 | 3228944 W74
W74's picture

Where was your previous Port of Call?  Sounds like you were talking about Mumbai, but I'm not sure if you meant to put that in the parenthasies or not.

Sat, 02/09/2013 - 10:54 | 3228589 Vooter
Vooter's picture

Yeah, it would be really cool--if eating, drinking and hanging out is your goal in life...

Fri, 02/08/2013 - 21:35 | 3227867 Quantum Nucleonics
Quantum Nucleonics's picture

This isn't the shocking news Tyler makes it out to be. They are just setting the official rate to where the black market has been for quite a while. Far more important is that they froze prices of groceries. Yea, that always works.

It's interesting to note that if you want to buy corn flour, i.e. basic staples, you need to pay in dollars in the alley.

Fri, 02/08/2013 - 23:34 | 3228130 Son of Loki
Son of Loki's picture

My neighbor is from Cambodia. He tells me he would not be alive if he did not have "small gold coins" to buy his way from Cambodia to China...then on to Vietnam...then on to Canada .....then on to here, the USA..during the wars of the 1960s and 1970s.  He says paper money was simply worthless to the people he had to bribe to escape at each point.


I am glad he did. He now owns three restaurants and is very generous to local organizations and is a super hard worker. Even now, he says 10% of his earnings go into PMs. Same for his kids who work in his restaurants. 10% each of them....


There's an important lesson here frm that culture. All should take heed.

Sat, 02/09/2013 - 13:47 | 3228813 W74
W74's picture

That doesn't even make sense. Cambodia borders Vietnam so why not go directly there? Also, to get to China he would've had to travel through Laos or perhaps through Thailand then Laos, or Thailand then Burma. Either way our of those your story doesn't make sense because that seems like a lot of out of the way travel plus too many border crossings.

I could be wrong though, and your guy had a legit reason for doing what he did and perhaps my Geographic training is simply getting the better of me. It would be like living in Philadelphia and then traveling to Vermont before making your way to New Jersey. It just doesn't make sense.

Fri, 02/08/2013 - 23:41 | 3228142 They Tried to S...
They Tried to Steal My Gold's picture

This is a ridiculous article....and untrue -The government has released inflation numbers at 2.3% for the last year.


I beleive it was the BLS that released that.... 

Sat, 02/09/2013 - 00:03 | 3228170 jonjon831983
jonjon831983's picture

No wonder why that ex-Iranian Central Banker tried to cash that 300 Million Bolivar cheque a couple weeks ago.

Sat, 02/09/2013 - 02:09 | 3228282 gwar5
gwar5's picture

good one, so true.

Sat, 02/09/2013 - 00:34 | 3228209 kennard
kennard's picture

This government posted exchange rate, and the supposed devaluation, is irrelevant, since the (black)market rate is 18 to the dollar.

Sat, 02/09/2013 - 00:36 | 3228210 silverdragon
silverdragon's picture

Anyone holding fiat got raped. Round one for Silver and Gold.

So the Chinese stock up on Gold to back their currency and then the Euro and dollar devalue. Tell me it aint so.

Buy silver and take physical possession, immediately!

Sat, 02/09/2013 - 02:23 | 3228287 chindit13
chindit13's picture

Actually, anyone holding a non-bolivar fiat did just as well, and given yesterday's price action plus any spread on buying/selling gold or silver, the non-bolivar fiat holders did better than PM holders.  In fact, dollar holders have done better than gold or silver holders over the last year, and the last two years.  Past performance is no guarantee and all that, but........

If the dollar goes, then yes, any physical asset will outperform the fiat, but plenty of smaller currencies have gone the same route while the dollar has continued to exist.  What happens in Venezuela or Zimbabwe has little to no impact on the US, EU, China, Japan, etc.

Everyone picks his poison, but given that the only meaningful measure of success is what is the means of exchange during one's time above ground, it is understandable that some people are comfortable with a hedge rather than an all-in position.  If we are to judge from history, we must consider not only Weimar, but also Nelson Bunker Hunt.  And if the dollar has fallen, whatever it is, 97% since 1913, that is primary concern only for those still getting paid in 1913 wages or those who treated fiat like PMs and buried them in the back yard.  Of course, anyone earning a wage in 1913 is likely to be pushing daisies already, so both paper and metals are meaningless to them now.

Sat, 02/09/2013 - 03:30 | 3228313 IridiumRebel
IridiumRebel's picture

Wonderful post. You hold onto 1700 dollars and I'll hold on to my ounce of gold and we will see who the fuck is where in 10 years!

Sat, 02/09/2013 - 13:40 | 3228801 W74
W74's picture

Anyone holding non-bolivars did well only if they were planning on buying Bolivars.

Sat, 02/09/2013 - 00:49 | 3228221 NoelConfidence
NoelConfidence's picture

Supernova goes pop!

Sat, 02/09/2013 - 02:07 | 3228281 gwar5
gwar5's picture

At least they got their gold. Chavez is dead! long live Chavez!


Suckers in Venezuala better throw out Chavez II if they don't want a decade of more of the same shit. Wonder if Germans are taking note of this.


Sat, 02/09/2013 - 14:47 | 3228938 earleflorida
earleflorida's picture

or, perhaps Merkel pulls a Hugo...

Sat, 02/09/2013 - 02:44 | 3228297 mrmister
mrmister's picture

What's all this about? All they did was debase their currency by half. BLAM!

Sat, 02/09/2013 - 08:08 | 3228421 AnAnonymous
AnAnonymous's picture

If that can not help 'american' oil addiction, what can?

Sat, 02/09/2013 - 09:46 | 3228501 slackrabbit
slackrabbit's picture

Nuke is exactly what I thoguht.

Expect central bankers to be busy preparing their own develatuions within the next quater...if not the market.

My guess expect trade 'sanctions' shortly...

Sat, 02/09/2013 - 12:05 | 3228655 Village Smithy
Village Smithy's picture

I'm not sure that Ben is still in the loop. Economic affairs will soon be overseen by the Dept. of Defence.

Sun, 02/10/2013 - 16:15 | 3231086 resurger
resurger's picture

Race to the bottom

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