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Venezuela Begins Liquidating Its Gold
Yesterday we reported that in retaliation to the latest Obama executive order which declared Venezuela a national security threat and ordered sanctions against seven officials, Maduro promptly took advantage of this "outside threat" to rally his toilet paper-starved population "around the flag", and while pointing at the "evil imperialist" Obama, granted himself even greater authoritarian powers: "I have put together a special law that gives me special powers to preserve the peace, the integrity and the sovereignty of the country before any situation that presents itself due to this imperialist aggression."
Bloomberg further quoted Maduro as saying that the "special decree powers will help defend Venezuela democracy, freedoms", that "the U.S. using human rights issues to justify invasion of Venezuela, planning trade blockade", and that Maduro will "lead a special defensive military exercise on March 14." Because nothing screams democracy like going "peak dictator" and launching a military exercise.
Venezuela's always entertaining leader aside, Venezuela's political problems have their basis in, and will only get worse due to one simple thing: money, or the lack thereof.
As a reminder, the nation whose primary - and only according to some - export is oil, has been slammed in recent months due to tumbling oil prices, which means oil is now a loss-maker for Caracas, whose oil breakeven price is said to be far higher than where Brent is currently trading. Which is why Maduro's political troubles seem to be multiplying in recent months: in fact it has gotten so bad that some press reports suggest Maduro's grip on the military is starting to wane.
Which likely explains why in an attempt to secure some stability, i.e., funds, now that Venezuela is no longer able to tap Chinese bailout loans as last-recourse funding, Reuters reported that Venezuela's central bank is in talks with Wall Street banks to create a gold swap that would allow it to monetize some $1.5 billion of the metal held as international reserves, according to government sources familiar with the operation.
Under the swap, the central bank would provide 1.4 million troy ounces in exchange for cash, said a central bank source. After four years, it would have right of first refusal to buy the gold back, added the source, who asked not to be identified.
Of course, by then Maduro will almost certainly no longer be the ruler, so the "gold buying back part" will be someone else's problem, and what is actually happening is that Maduro is "pawning" some 1.4 million ounces of gold to a banker syndicate, one organized by Bank of America and Credit Suisse according to Reuters, in exchange for $1.5 billion.
It also explains why there is an implied 7% discount to market prices in the swap, since 1.4 million ounces equivalent to $1.5 billion translates to about $1,070 per ounce, or a 7% discount to market.
Or said otherwise, a liquidation.
The banks and Venezuela's central bank did not immediately respond to requests for comment.
"Work is being done to complete this operation toward the end of April," said another source, linked to Venezuela's finance ministry.
Venezuela would have to pay interest on the funds but the central bank would most likely be able to maintain the gold as part of its foreign currency reserves.
As a further reminder, most of Venezuela's reserves are held in gold after late socialist leader Hugo Chavez began moving central bank assets away from the dollar in the wake of the 2008 global financial crisis. "The central bank in late 2013 received proposals to carry out a similar operation, the bank's chief said at the time, but denied any agreements had been completed."
And now, Venezuela is selling its gold, which at least in the global central bank arena, appears to be a far more liquid asset that "tradition" and is instead perfectly legitimate legal tender.
Finally, now that Maduro has tipped his hand how he plans on funding the country's near term debt and cash obligations, this is just the beginning: his administration faces a cash crunch following the maturity of a 1 billion euro bond this month and coupon payments of nearly $700 million in April. Expect Venezuela's gold liquidation to accelerate. The only question is who will end up the rightful owner of Venezuela's physical gold once the pawn shop confiscates the collateral.
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Maybe Putin is working the phones to get dibs on this.
$1070/oz? He deserves to be overthrown if he sells to WS at that price. What happened to the 30%+ premiums over spot buyers in Asia are supposedly paying for large qtys.?
Wonder what Jim Willie will have to say about this.
Market makers vs. market takers.
Selling the soul of Venezuela for power. That's all I can think as to why
"What happened to the 30%+ premiums over spot buyers in Asia are supposedly paying for large qtys?"
Desperation. Like when you're offered 30% of what you paid for your ex-wife's diamond.
Just like the Russian selling lies were the last trading bottom. They aren't selling their gold to US banks to get a measily 1.5 billion. Someone is terrified gold is about to break out vs the Euro as the Euro dumps. And when it does, it is taking the whole metals complex with it in all currencies.
**THE GOLD WILL BE SOLD VIA A MARKET ORDER IN THE THINNEST OF TRADING HOURS : REUTERS
The comment comes off as trying to be comedy but in all likelyhood is the truth. All wars are about money and (economic) bombs are dropping. Isn't that our answer to everything? There is money and there is,"money"--TPTB want their, "money" that they can create out of thin air by fiat to remain to be money (presumably for a lifetime?). Human nature takes over, eventually they start believing their own bullshit and here we are where we are.
Doesn''t Apple need that gold for the million $10K watches they plan on selling?
This is probably not the time to be selling gold.
Only country doing it worse than this was Ukraine and they had it stolen in the dark of the night...
Well that proves it, you cannot eat the shit. What good is it, barbarous relic..
The whore gobbles up nations.
The world waits for a weak moment.
The dogs eat the whore when she falls.
True story.
Whore eating dogs...
Sounds like one of those cheap Chinese funded action movies.
Set in Detroit and starring Samuel L. Jackson.
" I hate these MFing whore eating dogs!"
It's all just snakes on a plane, man.
"Under the swap, the central bank would provide 1.4 million troy ounces in exchange for cash"
Who is it that's buying gold for cash?? Venezuela or the CB?
Bankers only have one product, debt (loans).
National leaders only have a short time in office.
National leaders and bankers can enable grand projects with debts.
National taxpayers pick up this debt in the future, when that leader has long gone.
The article states "Which likely explains why in an attempt to secure some stability, i.e., funds, now that Venezuela is no longer able to tap Chinese bailout loans as last-recourse funding". Yet, the link is to a January 8 article in the Guradian that states the opposite. What's correct on this?
Of course Venezuela is fucked. They still persist in trying to be an independent nation to the intense irritation of neigboring giant. Giant will do a Cuba on them for the next 50 years at least.
Their fatal sin was to wrest power from the oil plutocrats and give it to the people.
If only we could do the same.
They should look to Europe and learn. Kiss US ass and support them in any adventure however insane.
Total ass clown
Gett'in ready for the US Dollar reset.
All I know is that the timing of this is conspicuous to say the least...what with the Shanghai Gold Exchange getting a hand in determining the gold fix as of March 20th...
I'd say, watch for more gold drama in the coming 2 weeks...
I guess it beats having them invade your country and steal it all. They've been known to do that can we count the times. The Hidden History of the United States, Chapter Whatever, What They'll NEVER Tell You In School.
Hes doing a fucking runner,.
No doubt next thing thing you will hear is that fat poncy little faggot Holland has given him a french passport so he can join all the other cannibals and insane dictators in Paris.
Cheese monkeys need their cut too
No. Maduro is spending his people's inheritance in hopes the crocodile will eat him last. Unfortunately, the croc will eat Maduro at its own convenience, not his. Once the banksters have what they want Maduro will be whacked like Ceausescu, by CIA agents among his own for plausible deniability's sake, and the banksters will walk off with Venezuela's oil.
Governments are obliged to keep their end of their bargains to banks, on pain of catastrophic consequences. Banks are never obliged to keep theirs.
$ 1,5 Billion in gold bars is simply next to nothing in the world of "governments", "debt" and "ponzi scheming".
That's $1.5 B, at current valuation...what will those bars be worth when gold skyrockets to $5k an ounce, or more?
Still, next to nothing in the world I mentioned. That's why gold is so h-u-g-e-l=y undervalued.
Another life line for the banksters to keep shorting the shit out of gold if true.
Looting is the best perk ever!
Goldy Sacks.
The best pink slip lender out there.
"Drag, push or tow your gold to Goldy's...We have the cash you need."
Why not just pay in gold? Oh, that's right.
Awww I would have traded some of my fiats for that discounted shiny metal. Why is goldman always getting the best deals?
It might be a good idea to refer to these types of things as the government of fill in the blank. Im just guessing here but the people of Veneszuela aint getting jack out of these sales.
That's an easy way for banksters to mine gold.The only difference here is that the U.S. isn't flying out the gold in the dead of night like they did in Ukraine,with armed thugs from the CIA guarding their actions..Besides,if you bomb them out like they did in Libya and then looting the gold there it would make a repeated strategy to obvious.Better to starve them out this time.What's the next strategy to acquire gold?May be disease,planned terrorism from U.S. funded groups like ISIL?Give us your gold or we'll fuck you bigtime.
http://presswire.com/content/1324064/board-governors-world-bank-and-imf-...
http://www.globalresearch.ca/world-bank-whistleblower-reveals-how-the-gl...
http://in5d.com/karen-hudes-dollar-to-crash/
Most thought she was just some quack but actually you'll find out that truth is often stranger than fiction today.The world financial system does not operate like you might think.
Seriously, who amongst you actually believes Venezuela is any kind of threat?
Let us speak plainly and be perfectly clear: there is no fucking threat; this is a ridiculously cynical pretext for continued aggression and everything to come.
With the stroke of a pen, Obama proclaims an "unusual and extraordinary threat to national security", declares a "national emergency to deal with that threat"" and does not even bother to explain (of course, because it is unjustifiable and embarrassingly ridiculous).
Yet, deep down, whether they admit it to themselves or not, most people implicitly accept this as correct and justified, regardless of its truth or falsehood.
It never ceases to amaze me how easily deceived, and how quickly the well trained sheeple acquiesces.
Please excuse me for a sec, while I hold up this big mirror and offer you a job.
Ok , now don't be too hard on yourself. Even if you scream to the four winds that you do not believe the bullshit, your deep conditioning makes me very confident that you instinctively know your role, so I am going to reward you.
I hereby deputize all of you as US propaganda junior G-Men.
Congratulations! You are now official enablers and justifiers.
Now Deputies, go out, vent your hate, ridicule the brown, socialist people, proclaim the immutability of your belief-based uninformed opinions, and do your duty. You are free to exercise initiative and come up with creative ways to demonize and rationalize.
Godspeed; our cause is righteous, and I am sure you will do the job well.
Who's a good sheep? Yeah you are!... come here my pretty... that's a good sheep... good sheep.
You know, if our masters were serious about making the world safe for democracy and free markets, they might consider that Maduro has long since worn out his welcome. In Caracas, Marines arrving to help Maduro pack for a long holiday in Gitmo really would be greeted as liberators. A far better investment than pissing off Putin is ever going to be.
Back in reality, of course, the plan is to steal everything of value, including the gold, before cutting Maduro loose.
Closest precedent is probably 1980s Romania. The banksters waited till Ceausescu had beaten every last cent out of his people before whacking him. I wonder what out-of-favour Chavista has been promised Maduro's job by the CIA. Bets on when we'll find out?
Niall Wrote- "In Caracas, Marines arrving to help Maduro pack for a long holiday in Gitmo really would be greeted as liberators."
Reminds me of an old Peter Sellers movie: "The Mouse That Roared"
Sure sign of market bottom, ala Britain.
I posted this long after a previous Venezuela story was buried by new ones, and I am sure very few people read it, so I will re-post.
I believe it is important to know exactly what these "additional powers" are, because they are deliberately misrepresented for propaganda purposes, and never explained by the MSM.
------------------------------------
On "Maduro's Special Powers"
The implicit propaganda goal here is to reinforce the perception that Venezuela lives under a dictatorship and is not democratic. This will probably be followed by the usual characterizations, such as "Strongman", "Maduro's Regime", and many other Pavlovian code words which we are trained to react to. You can expect the lock-step media barrage of "autocratic strongman" labels and all its variations to be incessantly applied to Maduro, as they were to Hugo Chavez.
Of course, the expectation is for the general populace to believe it and bleat it like good sheep.
Once this idea is cemented, it makes it easy to act with impunity and automatically discard any valid and true points made by the Venezuelan government about US destabilizing actions. Since they are a "lying, dictatorial, socialist regime" and not a democracy under attack, almost anything we do to them is "justified".
----------------------------------------
So what exactly are these "powers" and what is the context?
Well, in Spanish, it is called a "Ley Habilitante".
The MSM does not bother to explain, and the average US citizen cannot care less about, what these "powers" actually are. This is deliberately overlooked, and you can be certain that the subservient media will do everything in its power to use the oily language of innuendo and insinuation to suggest that it is a "usurpation of power" by Maduro, thereby reinforcing the above-mentioned point.
It is not a power grab or usurpation of power, nor is it a slide toward dictatorship. It is a legitimate and legal mechanism spelled out in Article 203 of the country's Constitution, and Venezuela is not the only democratic country who has these provisions included in its primary law. The president cannot "give himself special powers". He has to request it, and then be granted this power by the legislative branch of Venezuela's government.
These legislative powers have existed throughout Venezuela's history, and have been used by Democratically-elected Presidents, including Romulo Betancourt (1945–1948, 1959–1964), Rafael Caldera (1969–1974, 1994–1999), Carlos Andres Perez 1974–1979, 1989–1993), Hugo Chavez Frias (1999–2013), and now Nicolas Maduro Moros (2013- )
The "ley habilitante" allows the executive (elected president) to legislate directly by decree.
That sounds ominous doesn't it?
Of course, it is not what you think you know. It actually has built-in checks and balances. To wit-
This is certainly not quite what comes to mind when you read things like, I don't know, maybe this: "Maduro promptly took advantage of this "outside threat" to rally his toilet paper-starved population "around the flag", and while pointing at the "evil imperialist" Obama, granted himself even greater authoritarian powers"
All in all a lot less power than US President Executive Orders
And . . . .
it's GONE!
Barbaric!