Guest Post: What Will Become Of Chavez's Gold Hoard?

Tyler Durden's picture

Authored by Peter Christian Hall, originally posted at Reuters,

In August 2011, while undergoing cancer treatments that ultimately failed him, Venezuela’s President Hugo Chávez began withdrawing 160 tons of gold from U.S., European and Canadian banks. “It’s coming to the place it never should have left. ... The vaults of the central bank of Venezuela, not the bank of London or the bank of the United States. It’s our gold,” he said on national television as crowds cheered armored trucks carrying an initial bullion shipment to the central bank.

While Chávez suggested the gold repatriation might forestall a Libya-style seizure of Venezuela’s assets by Western powers he had antagonized, IHS Global Insight analyst Diego Moya-Ocampos told Reuters it might stymie potential claims by foreign corporations seeking compensation for nationalizations they had endured. Central Bank of Venezuela President Nelson Merentes said it was “an act of financial prudence and sovereignty” intended to guard against problems in the international markets.

The shipments, conducted by air after much talk of alternate delivery modes, concluded five months later in a celebratory caravan. (Germany’s doing it, too: Berlin has ordered repatriation of 674 metric tons of gold, worth $34 billion, from Paris and New York.)

The Caracas hoard would today be valued at around $9 billion, were it not for the fact that Venezuela has been selling it — about $550 million worth in the first eight months of 2012, according to the International Monetary Fund. Did further sales follow over the past six months, with proceeds partly paying for the public largesse that helped fuel Chávez’s victorious up-from-the-sickbed presidential run?

Hint: Even with the additional cash from gold sales, Venezuela’s foreign exchange reserves hit a five-year low in September, three weeks before Chávez won a narrower-than-customary victory over Henrique Capriles, who will represent the opposition in a presidential election to be held on April 14.

Campaigning to hold the presidency for the Bolivarian Revolution will be Chávez’s designated successor, Nicolás Maduro, a former foreign minister, National Assembly speaker, union leader and bus driver who marched to free Chávez after the visionary army major’s attempted coup put him in jail for two years. A prominent target of Chávez’s rebellion in 1992 was Miraflores Palace, the executive office complex at which he later lived and where Maduro now works.

Several blocks east of Miraflores Palace on Caracas’s broad Avenida Urbaneta stands the 26-story Central Bank of Venezuela, whose vaults are said to contain what remains of the repatriated gold.

At 50, Maduro has much to worry about. In October, challenger Capriles won 44 percent of the ballots against Chávez, then behaved gracefully in defeat. Capriles will be supported by the elements that staged a nearly successful coup against Chávez in 2002, details of which are still disputed. At the time, the U.S. blamed Chávez for the uproar, and documents later surfaced to show that the George W. Bush administration anticipated Chávez’s ouster. (A remarkable and controversial movie, The Revolution Will Not Be Televised, aka Chávez: Inside the Coup, was shot by an Irish film crew that documented the ins and outs of Chávez’s dramatic comeback; it can be viewed via YouTube.)

As Venezuelans look ahead, they are well armed. Global Firepower, a website that assesses the world’s militaries, ranks the country No. 40 in strength, behind only much larger Brazil and Mexico among Latin American nations. On the ground, Venezuela endures a harrowing crime rate. With one-fourth of Mexico’s population — and no formal cartels waging wars — the nation reported 161 percent as many murders as Mexico did in 2011. Reported abductions for money increased twentyfold from 1999 to 2011 (though many kidnappings are resolved privately, leaving no statistics). After 45 years in Caracas, Norway closed its embassy in 2012, preferring to operate from Bogota.

No one seems to know how or why violence is so endemic. For all the complaints about falling oil production and capital flight, Venezuela’s quality of life improved at the third-fastest rate in the world during the second half of Chávez’s presidency. Income inequality fell markedly and citizens expressed considerable satisfaction with life there.

Still, the country suffers towering levels of venality. In 2012, Transparency International’s global corruption index (see its map) rated Venezuela Latin America’s most corrupt nation. It ranked as the ninth-most-corrupt country in the world, trailing Iraq in a four-way tie with Burundi, Chad and Haiti.

Thus, there is something less than $8.5 billion in untraceable gold bullion stashed in an extremely politicized city that’s simmering with grudges and dreams. Should strife erupt in Caracas, thousands would inevitably covet a plentiful supply of metal that’s as liquid as can be when it comes to transactions. Physical gold is modestly short of priceless to a criminal. What mala gente or dissident generals wouldn’t want some of Chávez’s rich legacy?

So far, Chávez’s unusual choice to keep so much of his country’s foreign reserves in gold has paid well: Paper profits from the steep rise in the metal’s price surely outweigh proceeds from his pre-election bullion sale. But his demise leaves a glowing bomb buried underneath a tense society. It will take leadership and luck to keep the benefits of Venezuela’s bullion flowing peacefully and productively.

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kito's picture


Orly's picture

Maybe he's sick and tired of having his boards used as a garbage dump.

Maybe all the "venting" posters do here has no place in civilised society.

Maybe he doesn't want to hear perverted and disgusting rants from people getting their rocks off saying things they'd never say to their mother and certainly have absolutely nothing to do with the foundation of this site, which is economics and finance.

Maybe he's fed up with vulgarity, disrespect and mean-spiritedness.

Maybe a lot of posters abuse the privilege of being able to talk openly and this is a gentle reminder that all of that can be taken away without an okay from kito.

smlbizman's picture either are or you are not....i am man enough to handle all words, how about you?

true brain's picture

The first hint of censorship is the death of ZH. ZH is nothing without its readers and commenters. Some of the commenters here are the most insightful, analytical people I have read anywhere. They point out things, sometimes in irreverent ways, all right in sometimes racist, and offensive ways, but I would never think of these points without them. They truly open up my mind to different perspectives, thoughts, pov. etc. I can't say enough about the collective intelligence of this community. This is what a free community is like; no holds bar, all comments welcomed, no matter how hurtful. If you begin to censor, you just kill yourself. We're going drop off , one by one. ZH is dead. Your choice

Orly's picture

It's half-dead already.  Lots and lots of people would post far more often and give far more valuable insight than you can imagine, except thay don't want to expose themselves to racist, offensive and illiterate comments.

A free community, you say?  Without policemen?  No thanks.

It is always the lowest common denominator and the loudest and most vulgar that win.  There was some study done about that in like the madness of crowds or somewhere.  It said the crowd will devolve to the lowest common denominator unless there are policies and tools to stop it.

true brain's picture

Please post on nytimes. ZH is not for you.

Orly's picture

I'll keep that in mind.


fonzannoon's picture

ZH is not half dead. The market is totally dead. It's a corpse. Sitting here and comparing and contrasting investment philosophies has gone out the window along with fundamentals and any other actual means of analysis. That pretty much leaves us trying to discuss other topics of interest and sometimes ends with us flinging feces out of boredom. It's not our fault. They killed the market. This is just another byproduct of central planning. 

this comment is Brought to you by Carl's Jr. Fuck you, I'm eating.


Orly's picture

Hadn't looked at it that way, fonz.  You may be right about that.

Five Guys rocks!

flacon's picture


BLOTTO's picture

RE: Chavez's Gold...


How do we really know for sure he even got it? Anyone see any pics of it?

Where's Gaddafi's fuckin Gold? Where's the Fort knox Gold?


Where is anything for real for fuck sakes?

silverserfer's picture

sorry blotto this thread has been hijacked to discuss far more serious concerns. Gold schmold.

e_goldstein's picture

Gaddafi's gold is/was Chavez's gold. But in the long run, I'm guessing it is all the LBE's gold.*

* Unless it is your gold safely deposited in a deep body of water.



Kirk2NCC1701's picture

Funny how statesmen who tell the US/Fed to 'fornicate itself' and who say that they are going to sell their Crisco in non-USD currencies (Euro) or in gold, that they all end up being "really bad candidates for life insurance"?  And isn't it funny how their much poo-pooed "barbaric relic" then just pulls a Houdini and goes.. 'poof'? 

What a crazy coincidence that the DOD/ex-DOD and CIA/ex-CIA boys always appear after these statesmen die and the gold disappears.  To stabilize the region -- for the CB's?  /sarc

Bicycle Repairman's picture

"A free community, you say?  Without policemen?  No thanks."

Then leave.  Post at your nearest MSM newspaper.  Very secure.  Virtual Gitmos. Be gone.

true brain's picture

But seriously, what we are discussing is the slippery slope. how much is enough. well , for me when it comes to words and discussion, there can be no limit. I'm not physically hurting anyone with words. It's not like I'm driving a car here. THe moment you put limit, then who gets to decide. The point is if there is moderation then a lot of people will not trust that forum. For example, nytimes will only allow things they want on-pro establishment etc. I would never even waste time reading the comments there. I want to know every angles; therefore, I'll take the nonsense, the funny, the obscene, along with the wisdom, because sometimes there is wisdom in the nonsense, the funny, and the obscene.

Just of think of Million Dollar Bonus. He is different , funny and wise in a way.

akak's picture

Actually (and perhaps shockingly), I totally agree with Orly here.  I  have seen forum after forum mostly or even entirely destroyed by the complete lack of any kind of moderation.  I was a member of one PM-related forum in particular (and there are probably at least one or two former members of it reading this right now) that was essentially run into the ground by one single, persistent, and highly dedicated troll, combined with the site owner's complete unwillingness to deal with the problem until almost all the former members had been run off.

On the other hand, I have also been a member of more than one online forum (Kitco, cough cough) that was reduced to a shadow of the robust forum for discussion and debate that it had formerly been by overzealous, thin-skinned and outright intolerant "moderators" (ynot2k, you hypocritical and power-hungry bastard, I am looking at you).  So there is a fine line between too much oversight and too little.

For the most part, ZH has seemed to me to walk that line, if perhaps erring slightly on the "too little moderation" side.  Until today, that is.

Orly's picture

Well Tyler can go all Karl Denninger on your ass any time he wants...

akak's picture

I was appalled that I forgot to mention the ol' MarketTickerGulag, er, MarketTickerForum of Denninger's as an example (perhaps the quintessential example) of a rigidly controlled, overmoderated forum in my second paragraph above. 

"You will discuss that vile metal gold HERE and ONLY here!  Do it anywhere else in my forum and I BAN YOU!"



Oh, by the way, speaking of Denninger and gold:

magpie's picture

Much ado about nothing...compared to 80% of the bizarre slander on the Pope thread, i must have not failed on the content or delivery part, most likely only trolled the wrong person. And it gives me a welcome excuse for a vacation from the internets.

sgorem's picture

zh is not called the fight club for nothing orly. patience and intellect can always subdue vulgarity and arrogance. i use whatever it takes to get my point across, sometimes it's obnoxious, sometimes, hopefully, it's humorous and contains some wit. i still believe in free speech, and ZERO HEDGE sets a precedent for that privilege. we are NOT politically correct here, and it's a melting pot of ideas, beliefs, problems, and solutions that bring us all together. i guess i can throw my idea of a First Annual Zero Hedge Bar-b-Que and Beer Bust and Covention/ Seminar in the Washington Mall grounds out the window NOW. BYO? plus free tee shirts and catering by Hooters were the order of the day, but with all THIS dissension, i'm afraid we'd just get busted.

knukles's picture

Fight Club is an allegory of the individual coming to peace with himself, with his alter ego. 

H E D G E H O G's picture

Orly, have read your post and have re-directed it to the LongSoupLine for the appropriate response. will forward asap. thanks for your patience.

Kirk2NCC1701's picture

Orly: "It's half-dead already.  Lots and lots of people would post far more often and give far more valuable insight than you can imagine, except they don't want to expose themselves to racist, offensive and illiterate comments."

Another +69 up arrows for Orly!

As a paying customer, I think that the ZH gene-pool is getting 'diluted' in its blogs.  It would be nice and less embarrassing to refer this site to smart & worldly people (with means), but the trailer-trash talk IS getting out of hand.  There is NO excuse for it.  Such comments mask the low-IQ of its authors, manifests their emotional immaturity, and compensates for their personal insecurities.  These people would be better suited for the Jerry Springer show.

I wonder how many use it as a public latrine, and how many actually use/pay for the services advertized.  Only the Tylers know for sure, I guess.  But, as a growth model, w/o some people getting censor-whacked occasionally (in the hopes of "upping their game"), I can NOT imagine how this site has growth potential beyond the trailer trash crowd.

Dewey Cheatum Howe's picture

Board trolling is a common way to do the equivalent of character assasination of the board itself. I think you'd find out the most offensive and outright racist ones (they are the ones with no sense of context, humor or subtleness and don't come off as just plain jane bat shit crazy) are not speaking their own personal opinions but are doing "gods" work among other groups. You can hope the board members combat it but when they don't it, it is a damned if you do, damned if you don't type of deal when the admins have to step in and deal with it.

fuu's picture

One of the better board trolling techniques is the concern troll. As in, "I am concerned this website will fail completely if people do not adhere to my version of acceptable speech."

A couple of the people bitching about being censored have hounded other posters, spewed forth vile filth, and encouraged spamming to get people banned.

Then they brag about it.

I find it highly entertaining that they are now whinging about their crap being deleted.


Dewey Cheatum Howe's picture

Like I said damned if you do, damned if you don't when you are the admin.

All the personality types of trolls have been largely documented years ago.

A trip down the memory hole

Flame Warriors. Know the combatants


One of the combatants


Although sometimes a male, Crybaby is usually a female, and often a close ally of Innocence Abused. When teased or attacked Crybaby will pitch a loud public temper tantrum, holding her breath and kicking her feet. If that defense fails she will run to Nanny for comfort.


fuu's picture

Ah back when usenet was the internet. Good times.

tenpanhandle's picture

The pope is a penus and his outfit looks like it has a reservoir tip.


Edit:  well, there appears to be no censorship here.

otto skorzeny's picture

funny shit-i mean the fact that you are too stupid to spell penis correctly

tenpanhandle's picture

tried to correct it in an edit but got "denied access".

ACP's picture

An edit appears to not lock the database until a save, so a saved response before an edit-save will freeze the record.

kito's picture

that would be wonderful orly....we can have a discussion board that is a utopia.....just like the government of the united states is striving for...........censor and limit EVERYTHING so that we can all be happy little compliant serfs.......................great idea orly!!!! and it certainly fits right in with tylers mindset...............sanitize everthing!!!!!! great......i look forward to kindler gentler ZH.....................................lets test this:









am i still here?????



Orly's picture

News Flash:


It's not your site, idiot!

kito's picture

never said it was orly...........but as participants who may hate each other because we are jewish or catholic or black or a keynesian fool, we ALL STILL EXPECT THE RIGHT TO DEGRADE EACH OTHER IN AN OPEN AND OBVIOUS MANNER BECAUSE WE ARE SICK OF THE CENTRALIZED CONTROL THAT LIES OUTSIDE THE ZH FORUM....



Orly's picture

Sure.  Tell you what...get up and running and I'll be the first one there to tell my best Mickey Mouse jokes, okay?

kito's picture

oh orly, youre so cute........................

Orly's picture

Did you hear Mickey Mouse was getting a divorce?

Judge says, "Now Mickey you have to have some kind of evidence that Minnie is crazy."

Mickey said, "Oh, no, judge.  I never said Minnie was crazy.  I said she was fucking Goofy!"

Orly's picture

That one's gratis.


TheProphet's picture

I have always wondered if lesbians get PMS. Thanks Orly for clearing that up ;-)


deKevelioc's picture

Has the camel's nose slipped under the zerohedge tent?  Hope not.

ACP's picture

@kito: Can you give an example of an anti-Pope, anti-Catholic statement that was censored? Provided in the context of a quote or example, I doubt they would be censored again, if they were originally.


ParkAveFlasher's picture

Akak says, "I pee on the pope", and then I says, "in his mouth?"

Ghordius's picture

and the value of both comments is...?

ParkAveFlasher's picture

That said, never had a bigger laugh than yesterday.  Especially after a particular otto/kito exchange that proved a point.  Unfortunately otto took the moral high ground which as we all know ties up your hands unnecessarily.  that said I hope I haven't broken any eggshells / mentalities with my comments which were told in the vain of a jester, not a bully.  I insult the pope's office to prove my belief that no man is infallible by his own decree or that of others.  To me it is the same sickness as fiat.  "This has value because I say so" is a terribly infectious disease.  It's no far cry from "I am holy because I said goony googooles."

Dewey Cheatum Howe's picture

Sounds like someone is a little butt hurt. Get over yourself and move on.

akak's picture

Orly raises some potentially valid points.

However, I think even she would agree that the manner in which (at least) that one thread today was so heavily censored was utterly unprecedented in ZH history, and left many if not most posters here confused and upset. 

If some kind of posting guidelines are being instituted here, it would be helpful to all involved if they were made publicly known.  Deleting comments, and banning posters, with no guidelines and no explanations hardly makes for a healthy interactive environment.


PS: Yes, obviously, my ban was lifted.

kito's picture

akak, please define "potentially valid"............