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Venezuela Default Countdown Begins: After Selling Billions In Gold, Caracas Raids $467 Million In IMF Reserves
In late October, when describing Venezuela's desperate steps to keep itself afloat for a few more months, we reported that in order to fund $3.5 billion bond payments in early November, Maduro's government had engaged in something that is the very definition of insanity: selling the country's sovereign (and pateiently repatriated by his deceased predecessor) gold to repay creditors.
Specifically, in the past several months, Caracas has quietly parted with 19% of its gold holdings: "Central bank financial statements posted this week on its website show monetary gold totaled 91.41 billion bolivars in January and 74.14 billion bolivars in May. At the strongest official exchange rate of 6.3 bolivars per U.S. dollar, which the bank uses for its financial statements, that decline would be equivalent to $2.74 billion."
But while ridiculous, Venezuela's decision to liquidate some of its gold is perhaps understandable under the circumstances: Venezulea relies on crude oil for 95% of its export revenue, and with prices refusing to rebound, the only question is when do all those CDS which price in a Venezuela default finally get paid.
What is even more understandable is what Venezuela should have done in the first place before dumping a fifth of its gold, but got to do eventually, namely raiding all of the IMF capital held under its name in a special SDR reserve account.
Recall that this is precisely what Greece did in July when everyone was speculating when it would default. Now its Venezuela's turn.
The details: Reuters reports that Venezuela withdrew some $467 million from an IMF holding account in October, according to information posted on the fund's web-site, as the OPEC nation seeks to improve the liquidity of its reserves amid low oil prices and a severe recession.
Venezuela holds part of its reserves with the International Monetary Fund in an instrument called Special Drawing Rights (SDR), a basket of international currencies made up of the euro, Japanese yen, pound sterling and U.S. dollar.
The withdrawal will allow Venezuela to use the funds for imports or debt service, but does not change its total reserve holdings as SDRs are already accounted for.
Needless to say, it is far wiser to use up all paper "assets" to repay "paper" liabilities, before resorting to hart money. By then, it is usually game over anyway, so our advise to Mr. Maduro: just default now, and save your gold.
Referentially, the country's international reserves as of Thursday stood at $14.819 billion: and dropping fast. At this rate of depletion, we give Venezuela a few more months before the army takes over.
Finally, the central bank's most recent financial statements as of May, showed that 58% of reserves were held in gold. It is unclear how much, if any, were held in "toilet paper".
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Viva revolucion de papel higeinco!
No shit!
I remember musing about something like this happening when Hugo demanded his gold back.
a.) Ya don't fuck with the City of London the Craven Bestial Pet Rock Central Bank Rehypothecaiton Group
b.) Hugo was already well on his way to destroying the country and figured that the City et al via Citibank, Goldman et al would get this stuff back not just for storage, but to be owned, lock stock and barrel.
Now, with this making its way back to The City, can Germany get it's stash back any quicker?
I didn't think so.
Ask and ye shall be not given, merely told to fuck off.
Hey Knucks, I think we told Germany 2019, then bumped it back to 2021...and now it is 2027. But fo' SURE we sure went in mighty damned quick and took Ukraine’s meager little stash now didn’t we?
LOL
Yep! Exactamundo!
And don't forget. One of the original repatriations was agreed to as 40 tons per annum and right away, the French invade Mali and take over their gold production of .... ta dah! .... 40 tons per annum.
Not to mention Mo-Mar got his Mo-Par meeting Allah when he told the west to blow off and what happens at the very last moment? When all was lost, and the gold was supposedly gonna be taken by the bad guys, the western backed rebels make a bee line for Tripoli and seize the CB and it's vault .... oh Never mind. I'm preaching to the choir.
Every damned last (Ukraine anybody... anybody seen that gold? No! Why not!?!?!?!?) conflict the "theys" go right for the gold.
Barbaric Relic My Ass
The barbarism has nothing to do with The Relic.
Gaddaffi's gold fell to Al-CIA-duh. The Afghani opium/hash trade ain't the only game in Bartertown DC.
before resorting to hart money.
My ex also went right for the heart. Little editing please.
Maduro: "Rusia y China, ayudanme !!!"
Why don't they just fucking sell the gold in the NY Fed vault on the exchange and then turn around and buy the same amount in contracts and demand delivery?
Well, because of the dealer commissions on both ends of the transactions, for one.
Wasn't this all played out in, "The Panic of '89" by Paul Erdman (1986?)
Not his best, but somewhat prescient.
My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... www.wallstreet34.com
Viva La Socilista Revolucione!
"Venezuela default countdown begins"
Is it that time of year again?
Enter the Dragon (aka AIIB)
the fix is in....
can you say, "D_O_L_L_A_R_I_Z_A_T_I_O_N" ?
(but 1st, we have to have a really, really bloody coup)
"hart" money
I can dig it. The money you cry over when it's gone.
The socialist leaders of Venezuela would only take a financial action if it was in the best interests of the people of that great nation.
Obama, likewise, created a great economic miracle during his tenure and he did it by writing only eleven trillion dollars worth of rubber checks. It was for our own good, believe me, or our great leader wouldn't've done it.
We can expect more of the same wise budgetary decisions from Hillary or Bernie if they're elected.
I can't wait.
directaction: The socialist leaders of Venezuela would only take a financial action if it was in the best interests of the people of that great nation.
Obama, likewise, created a great economic miracle during his tenure and he did it by writing only eleven trillion dollars worth of rubber checks. It was for our own good, believe me, or our great leader wouldn't've done it.
We can expect more of the same wise budgetary decisions from Hillary or Bernie if they're elected.
I can't wait.
Do you SERIOUSLY fucking think that what ever the next jagg-off who is (s)elected President of USA will cut the bankster shackles? Fucking REALLY? Do you think (s)he will actually CUT government? Balance the budget? or even cut the RATE of increase?
Gimme some of what ever the fuck you're smokin'.
Just leave it up to Providence, those knucklers couldn't tie their own shoes during the night time, and it's pert near midnight.
C'mon guys. He really didn't need the sarc. on. That was too much hopieum to be believed.
OK, I didn't have enough to swill tonight....so I bought it hook, line and sinker.
I was being serious. Oh, yes I was. Listen and learn:
When we attain our workers paradise, economic pain will be a fading ugly memory from the terrible past.
That's why I want Bernie Sanders to win. That's why we should unquestioningly support our Dear Leader, Obama, too.
In fact, good citizens should be reporting those who say bad things about Dear Leader, Obama, to the authorities.
Please. I was having such a nice day. Saw the thing in the sky live, shot an exceptional round of golf, had some great spiritual discussions with very intelligent people and enjoyed the Bradley-Rios fight (especially the most cordial and touching human ending when Bradley, after having said thank you to Rios and his corner for the opportunity of the bout, looked at Teddy Atlas and said "We did it!" and Atlas kissed him on the forehead... That was a display of touching, amazing grace, and of all places, in the boxing ring, where you'd least expect it; almost a sign of possible salvation and redemption for all of mankind) and you remind me of ...
Oh Jesus H ....
"Doomed. We're fucking doomed"
- R M Nixon to H S Thompson. Fear and Loathing on the Campaign Trail
somebody missed a "sarc", I see :)
We all miss MDB.
Sniff my finger and tell me I am not Venezuelan!
See...socialism works very well. Just asked the bankrupt French-ez'
The banks are insolvent too. Why not just tell them to go fuck off?
http://video.cnbc.com/gallery/?video=3000449467
get ur shots ready....
i hate this fucker.....
He has some serious contrarian skills.
Gotta love all this throttling of "socialism". Venezuelans eat banker cock just as bad (or much, depending on how you look at it) as USA does. USA does not have Capitalism and we don't have Socialism... but we sure lubb chowing down on the Bankster trouser snake just as bad as they (Venezuelans) do.
Do you think Capitalism is working here at home in USA? Really?
Open wide assholes....
We don't have capitalism in the USA. We have corporatism, thanks to big government fellaters and an overregulated market that small businesses struggle to compete in.
Corporatism I guess sounds better than what it really is: Facism which is way more accurate.
Corporatism, Fascism, Socialism, (faux) Capitalism, my POINT is that ALL of it goes through the filter / funnel of Banksters where they pull their skim.
I guess he does fear an Army takeover, hence selling Gold to hold out as long as possible.
Interesting insight, + 1
He might be able to do a dirty deal or two with the banks (unpossible !!), sell Venezuela's gold for market, and let the banks pay a little less. And keep the skim for himself.
So who bought the gold? And why?
China.
Because he didn't have any hard currency to make the payments on his recent spate of Chicom loans.
Exactly as they expected and hoped for.
"the only question is when do all those CDS which price in a Venezuela default finally get paid."
Remember what the Banksters said? "WE decide when and who gets paid!"
Of course, it's "heads we win, and tails you lose." Really stupid bets.
Who are they selling their gold to .... political cronies .... for IOUs .... denominated in Bolivars .... corrupt socialist shits ?
They are'nt selling it to anyone, they are giving it to their creditors for debt payments, gold aint for saving, it's fer spendin.
Remember White Knight China riding to Venezuela's rescue with a nice, fat loan package?
Well, it came with a nice fat loan payment book too.
I sold my Venezuela bonds at $132, was a profitable ride up. Thank you socialist parasite economy wreckers.
I guess Bernie Sanders isn't getting a Chanukkah card this holiday season?
No, his is a special one with white snow-like powder to create a winter-like impression, you know, when the landscape withers turns brown and barren :-)
fuck Goldman
First off. the 6.3/1 rate is only to incentivize importers. You, I, or regular Venezuelans get 200/1, unless you want to go black market. At that rate, which is also low by a factor of 4, puts their gold reserves at $370 million. The black market rate has it at $95 million.
Second, this is not a debt crisis. They will use the reserves for imports, which means they wil burn through them even if the debt were zero.
Forward Socialism! Free the Ignorance!
I'm interested to see how they accomplish negative shelf stock.
(Insert prescient Margret Thatcher quote here)
Bloody Wogs!
Was I close?
LOL!!
So I guess the US can expect another wave of Venezuelian guests.
They totally wasted the only money they had to continue all their failed policies. This reminds me of one of Rod Serling's old Twilight Zone episodes, where the guy can't stop playing the one armed bandit.
Comming soon to a European shore near you. Another mega million venezuelan refugee demanding food and house