Maduro Preparing To Swap Venezuela's Gold For Dollars

Tyler Durden's picture

It was almost exactly two years ago when a cash-strapped Venezuela quietly conducted its first, little-noticed gold-for-cash swap with Citigroup, as part of which Maduro converted part of his nation's gold reserves into at least $1 billion in cash courtesy of the US bank. As Reuters reported then, the motive was simple: convert $1 billion of the country's gold into much needed dollars to fund imports and keep the economy from sinking. However, instead of selling the gold outright, a move which would have been met with a firestorm of protests from political opponents and allies alike, Maduro merely leased it to Citi instead.

Specifically, Venezuela provided 1.4 million troy ounces of gold to Citi in exchange for cash. And while Venezuela would have to pay interest on the funds, it got the key benefit of being able to maintain the gold as part of its foreign currency reserves. After all, the gold was "merely rehypothecated", if only on paper, the actual physical gold would be transferred to an unknown vault of Citi's choosing where it would become an asset effectively controlled by the bailed out US ban (there was a brief scare last July when Citi warned it would close the account of the Venezuela Central Bank, which prompted us to ask if Citigroup was about to confiscate $1 billion in Venezuela gold).

While it is still unknown if Citi did in fact confiscate a substantial chunk of Venezuela's sovereign gold, what is worth noting is that even just two years ago, Venezuela was in far better economic and social shape than it is currently, which ultimately prompted Maduro's choice of picking a swap instead of an outright sale of the country's gold. Now, however, with hyperinflation rampant, with daily protests, many of which turn violent and deadly, and with the opposition set to unleash the "mother of all protests" on Wednesday even as Maduro has ordered the army to take to the streets, the president has far fewer qualms about preserving even the illusion of stability at this point. What he does need, however, is access to dollars, be it to pay Venezuela's creditors, provide funds to the cash strapped state-owned energy company PDVSA, or simply to pay the army which is the only thing keeping the nation away from a revolution, and Maduro from facing a deadly endgame.

Which is why Maduro is about to do what he did two years ago, only on a vastly greater scale, and perhaps simply sell Venezuela's gold outright.

That is the allegation made by Venezuela’s opposition, which according to Bloomberg has reached out to Wall Street banks to dissuade them from helping Maduro sell Venezuela's $7.7 billion in gold reserves (as of February) With Venezuela's foreign reserve hoard rapidly declining, gold now represents one of its most valuable assets; total foreign reserves stood at $10.3 billion on Monday, near a 15-year low

The letter sent by the opposition-led congress on Monday to top US banks, warns that Venezuela is going to try to stave off default by seeking to swap its gold reserves into cash, and any investment bank that helps will be effectively “supporting a government recognized by the international community as dictatorial." Furthermore, lawmakers also approved a measure today that they say would nullify any government debt issuance, as well as any debt swaps and pledges of gold as collateral, not explicitly approved by congress.

“The national government, through the central bank, is going to try to swap gold held as reserves for dollars to stay in power unconstitutionally,” according to the letter signed by National Assembly President Julio Borges. “I have the obligation to warn you that by supporting such a gold swap you would be taking actions favoring a government that’s been recognized as dictatorial by the international community.”

Lawmaker Angel Alvarado, a member of the National Assembly’s Finance Committee, said the letter has gone to banks including Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp.

Meanwhile, as Maduro rides a wave of anger over triple-digit inflation and chronic shortages of basic staples, investors are trying to determine the odds that the country will continue servicing its debt amid a dollar shortage worsened by the collapse in oil prices.

And speaking of Maduro, on Tuesday evening, speaking on state television the president said he would make declaration later Tuesday. “I will reveal tonight the right wing’s complete plans for the coming days and I will make a special declaration so the republic is alert,” Maduro said, adding that supporters should be alert to “defeat the coup d’etat and intervention.” And then, moments ago, Maduro accused opposition leader Borges of calling for a coup.

As a reminder, we reported yesterday that Maduro has ordered the army into the streets as the insolvent nation braces for what the opposition has vowed will be the "mother of all protests" on Wednesday.

Whatever the outcome of tomorrow's protest, or Maduro's upcoming gold lease or sale, one thing is certain: Hugo Chavez, who spent the last years of his life repatriating Venezuela's gold is spinning in his grave.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
hedgeless_horseman's picture


He apparently learned from the mistakes of Chavez, Ghadaffi, and Hussein.

Chock up another win for the petrol dollar!

Keep trading those finite resources for our infinite currency.


He is trying to avoid being suicided like Hugo. 

D Nyle's picture

 He is loading up a 747 like Marcos did in the Phillipines, before he got caught


Caught_Fish's picture

Why is it always,

the gold?

quartshort's picture

Fun-e ain't it? They ain't trading digital coins.


The $1288 question is:

"Who wants to own this non-producing barbaric relic?"


beemasters's picture

Can't he just lease out the gold like the Fed???

AVmaster's picture



Will probably buy him another 2-3 years before SHTF again...

Four chan's picture

the jew have them right where they want them. as usual.

NoPension's picture

2-3 months.

.....slowly, at first...then, all at once.

Garyly12's picture

Gold let it be sold Gold! Now Venezuela is officially finished!

Garyly12's picture

Gold let it be sold Gold! Now Venezuela is officially finished!

Twee Surgeon's picture

He will get his US Dollars from CHINA at a Huuuuge discount. It must be rough, having an entire nation , floating on (Sulphury) Oil and you still manage to fuck it all up !

All of their Oil gets refined in the USA, last time I checked ?

An amazing country famous for it's stunning beaches and scenery. Consistent Miss Universe winning Gorgeous girls, tons of arable land, fruit dripping off the trees whether you like it or not, a Commercial Natural Disneyland, Hookers and Blow if you like, fresh Mango with Vodka and a teeny umbrella.

All you have to do is chill out, be sensible and wire the Contracts so the Tourists and Oil Companies pay the population a Fair bit of running money.

But what do they do ? Turn it into an International Clusterfuck. And that is how you know, this shit is rigged. If you can fuck up running paradise you can fuck up almost anything. The Maduro dude looks retarded because........


Pinto Currency's picture

Maduro could just sell oil for gold.
That would solve his current problems - and he wouldn't need to worry about retirement planning.

Twee Surgeon's picture

Trump could say we are not refining Venezuelan oil in the USA because of 'Human Rights Issues' or ' Democracy or something.

Where would they send the Sulphuric Oil ? Iran ?

Trump could shut down this shit show with a sweep of a pen, as could all the other 'Presidents' before him.

Venezuelan oil goes to Texas refineries, think about that. Maduro is the convenient instalation of the decade, when the kitchen gets too hot they will see what he does.

His days are numbered, as is the entire Venezuelan Oil shtick. The guy is the Theresa May of Latin America. Installation art, at best.

detached.amusement's picture

LOL....yeah, I think that's probably his best quickest way to get suicided, all of a sudden he'll be come a horrible despot and we'll have to invade and put a puppet there like with every other country

Joe Mama 3's picture

true, so true. I was in Bucaramanga, Colombia last year. I would like to go back this summer, but I would like to go to Cucuta, Colombia also. On the border with Venezuela, it supposedly has the most dynamic border activity of Latin America. Goods made and sold at low socialist prices, smuggled into Cucuta and sold at market value. But it is absolutly true, you can have a blast in SA in ya can live to tell the tale !!!!!!!   I walked the streets of Bogota drunk at night twice, but it was kinda a better neighborhood !!!!!!!!!!!!!!!!

Twee Surgeon's picture

I would love to visit that neck of the woods someday. What a crying shame that such an international Money Spinner is nothing but a dodgy clusterfuck.

I can do Tropical climate with no problem, sadly the wallet and obligations are not equall to the dream.

SoDamnMad's picture

I never heard a story about whether he could drive a bus very well or just crashed it a couple times a month.

quartshort's picture

Funny old joke your post reminded me of:

The old Cherokee chief sat in his reservation hut, smoking the ceremonial pipe, eyeing the two US government officials sent to interview him.

"Chief Two Eagles," one official began, "you have observed the white man for many generations, you have seen his wars and his products, you have seen all his progress, and all his problems." The chief nodded. The official continued, "Considering recent events, in your opinion, where has the white man gone wrong?"

The chief stared at the government officials for over a minute, and then calmly replied. "When white man found the land, Indians were running it.

No taxes. No debt. Plenty buffalo. Plenty beaver.
Women did the work.
Medicine man free.
Indian men hunted and fished all the time...

The chief smiled, and added quietly, "White man dumb enough to think he could improve system like that."

2_legs_bahhhhhd's picture

What stupid fucking banker would exchange unlimited fiat for a worthless pile of yellow rock.

This turd smells like another IMF loot and pillage operation.

Quantum Bunk's picture

He just had to do this to rub even more salt in the gold communities wound.


It will never end.

invest3's picture

Here comes another levered paper gold smash on the Crimex with Venezuela's rehypothicated (soon to be stolen) gold.

Anteater's picture

He apparently learned from Poroshenko and Modi how to make your cronies rich by 'leasing' out your bullion TRANSFERRED TO THE CENTRAL BANK. Possession is 99% of the scam.

JustPrintMoreDuh's picture

Damn that dude is a genius.  Trade a useless barbaric relic for Federal Reserve Notes. Brilliant! 


The citizens of Venezuela should be greatful for such bold leadership.


I love you TPTB


order66's picture

When are the Tomahawk strikes?

CNONC's picture

After the gold has been delivered.

Bigly's picture

They need to print more as they need toilet paper 

HRH Feant's picture
HRH Feant (not verified) Bigly Apr 18, 2017 10:02 PM

I hate to say this but at this stage the last thing poor folks care about is TP.

They have been using old towels, ripped up sheets, and rags for months.

Soak them in some bleach, wash, rinse, reuse.

That book I finished reading this weekend discussed what to do in a household full of people when there is no toilet paper. The book went into detail. "The Mandibles" by Lionel Shriver.

I grew up poor and we had shortages. Each person had an assigned towel. That was used for drying, only. TP was saved for dealing with wiping your ass.

I have been reading up on various types of toilets. Found one that is basic, has replacement parts. Simple method used on boats and in some RVs. No black tank.

syzygysus's picture

Thanks for the reminder about that book. Its in my queue.

Son of Captain Nemo's picture

Gold $900 tomorrow!...

Janet Yellen will be sending Mr. Maduro an early celebration "bonus package" complete with another layer of "American security" to keep the natives in Caracas calm!

illuminatus's picture

Naw, my guess is that golds price in $ will now rise, just to show us plebes that they didn't need Maduros measly 200 tonnes.

TalkToLind's picture

Mission Accomplished!

Thebighouse's picture

Barry would be proud.  But madeuro is peanuts compared to the destruction obummer brought to this country.

10 Trillion buys a LOT of toilet paper. He did give out a lot of free stuff...phones, health insurance, ebt cards.

That madeuro guy is gonna be killed soon by his loving citizens.

Kinda wonder just HOW they keep the reigns of power. Like Little Kim in chorea too.

Nuts.  Or cheese.

Joe Mama 3's picture

It helps that Venezuelans and N Koreans dont own guns !!!!!!!!

Making Merica Great Again's picture

Dafuq why don't you just buy the printer and print your own dollars you damn moron...


Free gold for USA gg.

HRH Feant's picture
HRH Feant (not verified) Apr 18, 2017 8:36 PM


Hongcha's picture

I bet it's all already gone.

youarelost's picture

Bernie loves him. I hope the feel the fucking Bern there

Rabidcephalopod's picture

Lawmaker Angel Alvarado, a member of the National Assembly’s Finance Committee, said the letter has gone to banks including Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp.


None of those three leeches would have any qualms exchanging binary digits/FRN's for Venezuela's gold.

michigan independant's picture

Live another day, or your liver on a sharp stick over a fire feeding the revolution. Easy choice if we can fix stupid which is very difficult.

Thebighouse's picture

Come to think of it.....the way this distributive market is, we should exchange our stocks for toilet paper and water filters.

This whole mess is over.    

TheLastTrump's picture

GARTMAN!! FORE!!!!!!!!!!!!!!!!!

illuminatus's picture

Good work Lloyd. Doiing gods work can be such fun!

GoldHermit's picture

This gentleman has lost his marbles! He'll get a Christmas card from Janet Yellen though!

Yars Revenge's picture

Gold in exchange for monopoly money is a sweet deal for the banking cartel.

ali-ali-al-qomfri's picture

Man cannot live on Flamingo alone.

hedgeless_horseman's picture


I am thinking of a pairing with a rose wine, no?