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Things That Make You Go Hmmm.... Such As A Venezuelan Dictator Bringing Down The Global Gold Cartel

Tyler Durden's picture


A few days ago we penned "As Chavez Pulls Venezuela's Gold From JP Morgan, Is The Great Scramble For Physical Starting?" in which, logically, we wondered if the unwind of the great gold cartel, whose purported price manipulation has always resided in the domain of paper, or confidence-based, precious metals, may have started from the most unexpected source: Venezuelan dictator Hugo Chavez who just announced that he will not only nationalize the country's gold industry but reclaim his physical gold (however much of it may exist) from custodians such as JP Morgan and Bank of Nova Scotia. The practical implications of this move are substantial- since then gold has seen record high after record high. Whether one attributes these moves to Chavez, or to yet another global "risk-flaring" episode is unclear. Luckily, Grant Williams, author of the always entertaining "Things That Make you Go Hmmmm", provides some very fascinating observations on this very interesting topic...

From the full note (presented below):

To sum up:

  • It is common practice for most Central Banks to hold part of their gold reserves overseas in ‘gold trading centres’ (read London and New York)
  • One of those Central Banks - that of Venezuela - wants its gold back
  • That means that a group of banks (mainly in the UK and the USA) who are supposed to have that gold in their vaults need to GIVE it back...
  • ...which in turn could potentially trigger a race to repatriate national gold holdings
  • Neither Fort Knox nor the Federal Reserve (the world’s two biggest gold depositories) have been independently audited in recent times
  • The status of the gold held in the Bundesbank (home to the world’s third-largest hoard) is somewhat unclear
  • The practice of leasing gold by Central Banks has been going on so long that it even predates the time when Alan Greenspan advocated sound money
  • The gold ‘physical market’ is approximately 100 times the size of the amount of actual underlying metal by which it is purportedly backed
  • The top four bullion banks, or ‘commercials’ on the COMEX continue to run what we shall politely call ‘significant’ short positions (chart above)

In the three trading sessions since Chavez made his announcement on August 17th, gold has added almost $100, coming within a whisker of $1,900 before settling back at another record weekly close.


Market weakness? Maybe. Fear of further problems in Europe? Quite possibly. Continuing disgust with the world’s fiat currencies? Highly likely.


The beginning of a race amongst the world’s Central Banks to grab physical gold? Now THAT would be something to see...

Full note:

Hmmm August 20 2011


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Sun, 08/21/2011 - 13:11 | 1583520 DarthVaderMentor
DarthVaderMentor's picture

As much as I detest him, bravo for this move. We'll find out soon enough who's stronger: Despots elected by hiding behind a facade of communism and a controlled economy or crooks, fraudsters and banksters hiding behind the facade of democracy and alleged "free markets".

Sun, 08/21/2011 - 13:23 | 1583563 Upswaller
Upswaller's picture

Silly question for those of you with more capable brains than mine.....


By secretly purchasing massive amounts of precious metals,  and quietly minting a new PM-based-currency, could a nation begin distributing them as "real" money at an opportune moment,  swaying the world away from the fake US dollar?  How would a nation best go about this and could it work, stealing from the US its' reserve status? 

(Not that Chavez could do it, but it makes one wonder in general.


Sun, 08/21/2011 - 13:50 | 1583617 guidoamm
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Mr Bernard Von Nothaus is being prosecuted for doing just that... Legally it could be argued....

Sun, 08/21/2011 - 13:59 | 1583643 spiral_eyes
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the dollar will be broken by the fact that it is backed by the thin air coming from bernanke's mouth. this is the start of the shakedown. brace yourselves, bitchez 

Sun, 08/21/2011 - 16:04 | 1583874 Whalley World
Whalley World's picture

Even thin air has value, however, debt.... not so much.

Mon, 09/26/2011 - 13:31 | 1711900 strannick
strannick's picture

At least the Venuzeulan dictator admits gold is the ultimate currency. The American dictators are still trying to keep that a secret.

Sun, 08/21/2011 - 13:54 | 1583629 Turd Ferguson
Turd Ferguson's picture

The answer is YES. Especially when said dictator is allied with Russia and other countries who would prefer an end to American hegemony.

Sun, 08/21/2011 - 14:21 | 1583687 UGrev
UGrev's picture

And this to me is the only reason why they are doing this; adding to its (the requests) legitimicay by nationalizing gold mines. If he didn't do this, it would probably seem more obvious that it was a financial attack rather than a dicKtators agenda. But, I honestly think he's doing us a favor. 

Sun, 08/21/2011 - 16:29 | 1583913 midtowng
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The definition of a dictator requires that Chavez NOT be elected in a free and fair election certified by international observers.

Sun, 08/21/2011 - 18:23 | 1584140 EscapeKey
EscapeKey's picture

Define "free", "fair" and "international observers", please.

As an added bonus question, how "fair" are elections exactly, when only 2 candidates have got the necessary financial backing to deliver their message?

Sun, 08/21/2011 - 21:13 | 1584597 Rylie
Rylie's picture

when was the last free and fair election in the US??

They are bought and Payed for.... George W Bush ring a bell?

Mon, 08/22/2011 - 01:31 | 1585084 srelf
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U got dat right!

Sun, 08/21/2011 - 14:09 | 1583662 Badabing
Badabing's picture

"By secretly purchasing massive amounts of precious metals,  and quietly minting a new PM-based-currency"

I don't think it can happen without a reset in the price of gold>

Sun, 08/21/2011 - 14:20 | 1583664 Popo
Popo's picture

Sigh.  Yes, the dollar is overvalued.  Yes gold is going to go to the fucking moon.  BUT:

No. The dollar is not "fake".  The value of the dollar is exactly the value of the dollar currently.  No more, no less. 

To say that the dollar is backed by "nothing" is really just ignorance.  The US petrodollar empire is based on control of the oil trade (among other markets) which in turn is defended by:  the most powerful military in the history of the world, an intricate network of military bases (not coincidentally clustered in the oil producing region of the world) and various well-armed proxy states.  (Also non-coincidentally located in the oil producing region of the world).

The dollar is a measurement of power.  And that power is used to control the world's energy supply. (It's amazing that most people don't know this... as if 3 simultaneous wars aren't enough evidence).   The power of the US *is* unquestionably in decline.   And it is most definitely being challenged, slowly but surely by rising powers.  But to suggest that the petrodollar empire is dead, or is nothing but a paper-tiger would be idiotic. 

And by the way -- THE REAL REASON CHAVEZ IS BRINGING HIS GOLD HOME is not because he's worried about the banking system.  He's worried that he's the next Libya.   As US power wanes,  the US will become increasingly militarized in an effort to seize all the world's oil.  Chavez watched in horror as Qadaffi's international accounts were cut off.   Qadaffi *could* have held off indefinitely if he'd had the capital to arm himself well.  (He could have made the US and Europe pay an *extremely* high price for their aggression).  But because Qadaffi's financial capacity was kneecapped -- Qadaffi is going to lose.

Chavez will not make the same mistake. 

The Venezuelan re-patriation of gold has nothing to do with this "Is there any gold in Fort Knox" silliness, and everything to do with the fact that Chavez knows he's next.


Sun, 08/21/2011 - 14:21 | 1583689 equity_momo
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+ log in
Very well stated popo. Many fail to see the difference between the USD and the Zim Dollar.

Sun, 08/21/2011 - 14:48 | 1583734 VonStrakovich
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That's an interesting insight Popo. It sounds less likely from the comfort in the mountains of TN; but if I were the dictator of Venezuela I would be thinking about it every waking hour of the day.

Sun, 08/21/2011 - 15:10 | 1583768 cheesewizz
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Remove Popo from the Lemmings list... Original thinker at work.

Sun, 08/21/2011 - 15:22 | 1583782 DarthVaderMentor
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That may be the reason he's bringing the gold back to Caracas, but the effects of this action may turn out to be a nail in the current administration's economic coffin and the trigger for massive prosecutions of fraud in the so-called "Democratic free markets".

I would be ironic that Chavez, in a defensive move to protect himself as a "nuveaux communist" who is actually a run of the mill 2-bit despot who was smart enough to rightfully be elected to power by espousing the con acting like a true virulent anti-American colonialist political platform, actually decimates the bankster propped American and European free market economic systems by exposing a massive fraud of over inflated and fraudulently accounted for free world bank held gold inventories.

It's unintended consequences of decisions by the free world powers that create ironies like this that make turning points in world history.


Sun, 08/21/2011 - 22:51 | 1584856 vamoose1
vamoose1's picture

awesome,  your last  sentence.  kudos

Sun, 08/21/2011 - 15:34 | 1583818 11b40
11b40's picture

Yes, and if Chavez needed any hard evidence, we are providing plenty with our troops now using 7 military bases in Columbia.  Narco traffic, indeed.

Sun, 08/21/2011 - 16:11 | 1583881 Whalley World
Whalley World's picture

I follow the line of thought that Hyperinflation is a psychological phenomenon whereby when, not if, the people realize their phiat is phoney, they will buy what they can to unload their tiny cotton sheets of illusion,

Sun, 08/21/2011 - 16:31 | 1583917 Pain Train
Pain Train's picture

100% agree on the Chavez/gold connection. But the part on the dollar being intrinsically valuable is completely wrong. By this logic, we could print an infinite number of dollars, but so long as we maintain military advantage, the dollar will remain valuable. Try telling this to the Roman Empire. Oh yeah, they suffered economic collapse due in no small part to economic mismanagement IN SPITE OF their military power. 

I'd start with Admiral McMullen's recent statement that the biggest threat to national security is the national debt. Why would this be the case if the dollar was "backed by American power"??? Because at some point, the dollar will collapse because of continued debasement, and when it does, the money needed to fund our military will be worthless. 

To say that the dollar is worth something because it's backed by US military power is wishful thinking and not supported by fact.

Sun, 08/21/2011 - 16:37 | 1583925 mt paul
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also removed his paper assets 

out of western banks last week

deposited in BRIC banks ..

after seeing LIbyan  paper assets get trashed

while held in western banks ..


gonna be an interesting week ..

Sun, 08/21/2011 - 17:22 | 1584016 Sudden Debt
Sudden Debt's picture

There's this one saying that comes from the Romans that still stands:

The outcome from any conflict doesn't come from the one with the biggest army but with the biggest gold chest.

Whatever the size of the militairy aparatus the US now has, it has the be maintained and paid for. Obama now knows that the militairy of the US is some of the only things that keeps the dollar up but to keep it up he needs to find money for it.

The money isn't a problem. As long as the rest of the world and the militairy itself keeps believing in the dollar.

There have been plenty of empires in the world. They all fell when they failled to fund their militairy. The USSR is the latest good example for it.



Sun, 08/21/2011 - 22:42 | 1584832 eureka
eureka's picture

Let it fall.

Mon, 08/22/2011 - 06:58 | 1585285 DrunkenMonkey
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Aaah, the good old days when mercenaries were plentiful, oh wait, they are again now ..

Sun, 08/21/2011 - 17:27 | 1584021 dwdollar
dwdollar's picture

"And by the way -- THE REAL REASON CHAVEZ IS BRINGING HIS GOLD HOME is not because he's worried about the banking system. He's worried that he's the next Libya."

I completely agree with you up until this point. I think he's got two good reasons and he knows both of them. Chavez may be a lot of things, but he's not a fool. These third world leaders like Chavez and Qadaffi have to be smart in order to survive. The only reason they keep the gold offshore is to have it safe in the event of a revolution and loss of power. They can simple flee the country and retire somewhere. However, Qadaffi was betrayed and had no where to run. Chavez now knows the risks of keeping it offshore outweigh the risks of keeping it in the country.

Regardless, his actions may precipitate something bigger, whether he realizes it or not.

Sun, 08/21/2011 - 17:47 | 1584073 destiny
destiny's picture

Yes nice points, but then again Chavez may not live very much longer in the first place (chemio poisonned), so why would he care to be next ?

Sun, 08/21/2011 - 18:32 | 1584161 EscapeKey
EscapeKey's picture

Chavez is not Gaddafi. The Chinese have made infrastructure investments in Venezuela, and Chavez has openly discussed the possibility of selling yet even more oil to the Chinese.

An attack on Venezuela would from the perspective of the Chinese, be considered an openly hostile act. This goes for Iran as well, btw.

Oh, and a minor point;

"the most powerful military in the history of the world"

Redundant. Every "most powerful military in the world" has always been "in the history of the world". It's called progress. Roman armies wouldn't last 5 minutes vs an 1890'es British army.

Sun, 08/21/2011 - 22:54 | 1584870 Popo
Popo's picture

I'll take your point on redundancy. That is of course, true.

Re: the Chinese: they had huge infrastructure deals in Libya too. That arguably was the reason for the acellerated invasion.

Mon, 08/22/2011 - 08:43 | 1585467 pazmaker
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Tell me where china doesn't have it's hands in the pot?

Mon, 08/22/2011 - 10:51 | 1585879 your-a-peon
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agreed , but will they actually let him have his gold being that he is in the firing line of the empire. russia is backing chavez yes, but i could still see some hiccup somewhere just before he is able to take delivery.

Sun, 08/21/2011 - 14:55 | 1583745 Save_America1st
Save_America1st's picture

Turd is right...and also know this: Ghadaffi also has/had a massive amount of gold in his possession.  It was said that he was about to re-establish the gold Dinar (Islamic money) in North Africa.  It would be used for trade instead of the U.S. petro-dollar.  Here's one example of an article on that subject:

We aren't taking Gadaffi out because of humanitarian reasons and not even for any of his oil.  We're taking him out because he wasn't going to play ball anymore.  Many say Saddam Hussein was also getting ready to drop the petro-dollar and thus was finally taken out because he wouldn't play ball anymore either. 

Chavez has made big allies with China and Russia and is now arming himself with big-time missles.  He knows we took out Saddam and that we're about to take out Gadaffi for the same reasons, and so he's building up to defend himself. 

Things are gonig to get really interesting from here on out...

Keep stackin' the phyzz folks!!!

Sun, 08/21/2011 - 16:27 | 1583909 disabledvet
disabledvet's picture

Well...thank God for 'merica again! Now shut up Chavez and eat a pringle. (it's all your allotted for this week. Sorry el jeffe.) and here comes your gold in 5..4..3..2..1....

Sun, 08/21/2011 - 15:27 | 1583797 max2205
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Sun, 08/21/2011 - 15:32 | 1583817 Temporalist
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Jim Rickards has commented and reported on that exact scenario as well as

Sun, 08/21/2011 - 15:44 | 1583838 Dr. Porkchop
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If a country were to bring out a PM based currency, the first thing I would do is fly down there and buy as many dollars as I could then demand conversion to gold.

The fastest way to guarantee all the gold flows out of your country.

Sun, 08/21/2011 - 19:30 | 1584333 msamour
msamour's picture

The use of a currency is based on confidence, and not really in the inherent value of the currency itself. In order to achieve what you describe, said entity trying to secretly issue the new currency would have to convince everyone using the currency they are trying to replace to stop using it.

There is also next to no incentive to actually issueing currency that contain precious metals because then it will eventually cease to circulate as the "smart people" will begin to hoard it, and melt it for its precious metal value. This has actually happened in the past, I have heard stories of Chinese Americans mailing home to China hundreds of rolls of old coins containing silver to be melted over there.

For a new currency to work and for a real change in paradigm, there are a few things that need to happen. 1) The people have to start understanding the level of corruption occuring in their respective countries. 2.) The people have ti understand that the tax system in each country is set up to perpetuate the system of corruption. 3.) The people must cease to participate in the economic system by massively converting their fiat confidence based currncies into precious metals, and non luxury/non vanity based commodity they will actually keep at home.

There are more requirements that could precipitate a currency collapse such has hyper-inflation, and price controls, and rationing, but these are actually top down kinds of event. What is needed id bottom up events that the ruling elite never see coming.


I believe we are starting to get to that point. It will be interesting to see if the elites of the world can manage to keep control, or end up swinging on ropes.

Sun, 08/21/2011 - 13:38 | 1583588 smlbizman
smlbizman's picture

first of all my guess is chinia is behind this move....but my questions are..

1} what happens if he does not get his gold?

2} will others be taught a lesson , don't ask?

3} will others wise up and demand their gold back?

chavez is so minor they could just put him on hold or let the machine get it.....

Sun, 08/21/2011 - 13:42 | 1583594 Sudden Debt
Sudden Debt's picture

The answer is pretty simple:

If he doesn't get it, everybody will doubt the existence of the Fort Know Gold stash. Thus panick will brake out and everybody will want it all back at the same time. Thus a gold rush will form. Thus a dollar crisis beyond belief making the dollar drop 99% in a matter of months.

Nop, they'll give him the gold. But the question will be, who's gold will it be.


Sun, 08/21/2011 - 13:57 | 1583638 guidoamm
guidoamm's picture

Hong kong has already officially asked and, I believe, received their stash... Last year there were rumors that Germany had asked their stash to be returned too..

Lest we forget what finally brought about the abrogation of bretton woods in 1970.... Merci m. Degaulle.... Halas debt based fiat money survived that blow by means of the floating exchange rate mechanism....

Can we finally drive a stake through dbfm now?

Sun, 08/21/2011 - 14:04 | 1583652 iDealMeat
iDealMeat's picture

This could get pretty interesting. If Chavez demands the gold and the dirtbags at the Morg can only offer inflated FRNs, then Chavez could threaten to turn off the Oil Spigot..  He's got the strong hand on this one..   Game on!

Sun, 08/21/2011 - 14:15 | 1583674 DaBernank
DaBernank's picture

Almost a strong hand... he needs to sell the oil to pay for the operation of his country. So he sells to somebody else who brings it into the fungible market.

Sun, 08/21/2011 - 18:00 | 1584095 SystemsGuy
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I cannot imagine that the Chinese do not have representatives sitting in Caracas right now ready to write a check the moment he sells. He will not have problems selling oil.

Sun, 08/21/2011 - 15:30 | 1583808 snowball777
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You do know that Ft. Knox and JPM have independent vaults, right?

Sun, 08/21/2011 - 18:41 | 1584179 StychoKiller
StychoKiller's picture

Better questions:  How much tungsten is in those vaults, and WHO owns it?

Sun, 08/21/2011 - 16:26 | 1583906 midtowng
midtowng's picture

I agree. If they can't or won't give Chavez his gold back then everyone will doubt how much gold there is. Thus setting off a scramble for it.

Of course if they give his someone else's gold, and that someone else also wants their gold, then that will set off an international scramble for gold as well.

Sun, 08/21/2011 - 18:44 | 1584184 StychoKiller
StychoKiller's picture

Looks like it's time for an audit (hundreds of INDEPENDENT audits!)

Sun, 08/21/2011 - 18:53 | 1584171 New World Chaos
New World Chaos's picture

I have a feeling the shipment will be sunk.  If not, then they will give him Gaddafi's gold.  Just in time.  If Chavez really wants to kick the West in the nuts, he could then turn around and tell the world we gave him tungsten!  Who has more credibility at this point?

Sun, 08/21/2011 - 14:09 | 1583663 Sudden Debt
Sudden Debt's picture

It never happened before righ?


Morgan Stanley DW Inc.

New York, NY: (Jun-12-07) A class action lawsuit filed by brokerage clients against Morgan Stanley alleged that the financial firm told clients it was selling them precious metals that they would own in full. Morgan Stanley said it would store the metals, but made no investment specifically on behalf of those clients, or made entirely different investments of lesser value and security. The suit was filed by Selwyn Silberblatt in August 2005 on behalf of himself and others who bought precious metals, gold, silver, platinum, and palladium in bullion bar or coins, from Morgan Stanley DW Inc. and its predecessors and paid fees for their storage. The suit covered investors who did so between February 19, 1986 and January 10, 2007.

In a settlement reached, Morgan Stanley agreed to pay $4.4 million to settle the class action lawsuit. The company did not admit to any wrongdoing, but stated that the settlement was made to avoid the costs of protracted litigation. [REUTERS: PRECIOUS METALS FRAUD]


Strange nobody ever mentions this one anymore :)

Sun, 08/21/2011 - 15:28 | 1583800 snowball777
snowball777's picture

Among the hurdles for plaintiff was that no class member suffered a loss. Unallocated metals could have been subject to a lien by a creditor of defendants or the warehouseman but none were.

Also, it would have been difficult to establish that there was illegality in charging a storage fee for unallocated precious metals, absent a misstatement.
Proving that a storage fee of .75% was excessive and unlawful would have been difficult in both legal theory and in fact.

24,000 or so class members failed to read the fine print and were too lazy to take delivery, but had a humbug about paying storage fees for unallocated metal. Meh.

Sun, 08/21/2011 - 16:41 | 1583935 tmosley
tmosley's picture

It's hilarious that you can't tell the difference between owning a share on a physical bar of metal and owning a share of nothing.

People like you make people like me rich.  Keep it up.

Sun, 08/21/2011 - 19:30 | 1584337 snowball777
snowball777's picture

People like me, who only buy physical bars that are in my possession, make people like you, asshats who like to brag while being thoroughly uninformed, "rich", for some definition of that term hitherto unspecified?

Do tell.

Sun, 08/21/2011 - 14:34 | 1583711 goldfish1
goldfish1's picture

Speaking of being taught a lesson:


The she said/he said saga of the hotel housekeeper versus the wealthy Frenchman is heating up again in New York. Nafissatou Diallo's lawyer has told reporters that he expects she will be informed Monday that prosecutors are preparing to dismiss all or some of the charges against Dominique Strauss-Kahn, the former head of the International Monetary Fund who she says tried to rape her.

Sun, 08/21/2011 - 15:29 | 1583806 snowball777
snowball777's picture

Criminal charges, yes, but I'd keep an eye on her civil suit.

Sun, 08/21/2011 - 15:30 | 1583809 sgt_doom
sgt_doom's picture

And for the REAL STORY ON THE DSK AFFAIR, read Pam Martens excellent backstory:

Most enlightening!

Sun, 08/21/2011 - 17:01 | 1583967 Dapper Dan
Dapper Dan's picture

My three favoite sites,  all have a boxing theme.

Fight Club


The Daily Bell  (when you hear the bell go to a neutral corner)

Stop Clinging to False Hope and Face Reality Saturday, August 20, 2011 – by Anthony Wile The Daily Bell

All week long we have been witnessing a breakdown in global markets, or perhaps better stated – general public confidence. Gee, why would that be, we wonder? Why is it that the general public is not so easily convinced that all will be okay? Where is the usual confidence in their elected and non-elected leaders who've been given license to run the world, practically speaking?

Well, we don't want to be the ones who say, "We told you so," but we did. And besides our publishing efforts here at the Daily Bell we have been trying our best to help spread the word as it relates to the oncoming financial hurricane (Hurricane Reality) for more than ten years now. Has it helped? Absolutely, for some.

Read more @

Sun, 08/21/2011 - 15:28 | 1583803 sgt_doom
sgt_doom's picture

You must be a totalitarian, sonny (DarthVaderMentor) if you detest the democratically-elected populist President Hugo Chavez.

Viva Chavez!!!!!!!!!!!   If only Amerika had someone decent and respectable like he.

"Venezuelan dictator" WTF...WTF???  Is TD on the payroll of the American Enterprise Institute.....or the NY Times????

Since when are democratically-elected rulers dictators, doood????

Maybe you attended college alongside our illustratious VP, Joey bin Biden, who recently remarked that the way to create jobs in Amerika is to convince the Chinese they should invest here??? WTF, doodettes?  (News flash, Joey bin Biden, American-based multiationals and corporations have offshored the product assets, and capital assets, duuuuh!!!!)

I mean, is that the very same VP Joey bin Biden who proclaimed that Mubarak wasn't a dictator (just hanging out jail cages in a courthouse in Cairo) and that Wikileaks' Julian Assange was an "international terrorist"???  WTF, dooood??

At least in Venezuela, they actually have a democratically-elected president who appears to care for the populace on the whole, and pays attention to the oppressed (first-time free clinics, free college eduction, etc., etc., etc. --- not monopolization for Wall Street, like that Reagan-Bush-Clinton-Bush and now Obama, the Hopeless Changeling!!!).

Sun, 08/21/2011 - 15:50 | 1583851 Lord Koos
Lord Koos's picture

I kind of like Chavez too, he's got balls, and he's popular with the average Venezuelan (but not with the elite).  Don't forget that Hitler was also elected by a democratic majority.  So was Dick Cheney.  Just because there is a democratic system doesn't mean there can't be a dictator, it's not mutually exclusive.

Sun, 08/21/2011 - 19:59 | 1584427 Blano
Blano's picture

IIRC Hitler got something like 34 percent of the vote; not a majority by any means, but more votes than the other candidates therefore enough to name himself Chancellor.

Mon, 08/22/2011 - 11:52 | 1586174 your-a-peon
your-a-peon's picture

indeed obama was elected, money can buy you into a lot of things.. obama is hitler on steroids and he was voted in just the same.

Sun, 08/21/2011 - 16:18 | 1583868 DarthVaderMentor
DarthVaderMentor's picture

As I have said, he was elected on a political platform of anti-American colonialism with a plan to re-distribute wealth and act solely for the advancement and furthering of the interests of Venezuela. I know. I was there to see it myself while on business. He was righteous and very accomodating, much in the manner of Fidel's revolution, which was heartily at first accepted by many of my gullible gringo countrymen as well. 

Unfortunately, he used that set of ideals to leverage what has turned into a typical dictatorship that maintains a veneer of respectability through the curtain of intense socialism and "Cuban style" communism. As the people become aware that they have been fooled, he has methodically implemented a police state delivered and supported by the resources of his close friend an ally Fidel Castro.

I don't agree with the way America has treated this country. Our foreign policy, and the way we treated this country, at best, shows how ignorant, greedy and inept Washington can be. I was there when Nixon was assaulted in Venezuela and the US was as much at fault as it being the victim. Chavez succeeded because our economic and foreign policy was one of benign neglect and threat of military force for decades.

On the other hand, the Venezuelan people are now suffering under a dictatorship not much different than that of other very successful despots of the past and present, like Stalin, Ghaddafi, Saddam Hussein and Fidel Castro. All these dictators have one thing in common: they use religion, political dogma or anti-colonial righteousness to initially take over then over time expose themselves for what they are: brutal, run of the mill despotic dictatorships. Chavez, like all of the above list, initially got the support of the world because they are perceived as gutsy when facing America and other colonial powers. That is commendable for them. The problem is when the gullible foreigners (especially my ignorant countrymen) then overlook the brutality of the regime because it's cool to be anti-American, which is unfortunately, just a cover story. I'm certainly not for American internvention and the religious neo-colonialism (neo-conservatism) of our past administration which has led to military blunders, but I also don't endorse the brutality of a Chekist trained police state either.

Disclosure: I am an American citizen by birth (and my father's family help found America), yet one of my ancestors was el "Mocho" Hernandez who tried to liberate Venezuela from the tyranny of Spanish colonialism. I have shaken hands with Fidel, my uncle's initmate knowledge of the jungles of Bolivia and Ecuador helped hunt down El Che, I sat in the Lap of Rafael Leonidas Trujillo, my Dad destroyed the shining path guerillas in Eciador by giving the poor people there electricity for the first time and besides being tri-lingual I have visited and done business dozens of times with people in Venezuela. In my travels there I have many times walked through Caracas and other cities with no one ever noticing that I am not a local, since my accent is just like theirs and I am thoroughly knowledgeable on their culture, mannerisms and language.



Sun, 08/21/2011 - 16:23 | 1583903 midtowng
midtowng's picture

Yet Venezuela has free and fair elections that are verified by independent observers, while Cuba doesn't.

Sun, 08/21/2011 - 23:26 | 1584929 eureka
eureka's picture

DVM: "they use religion, political dogma or anti-colonial righteousness..."

Taking "anti" out of your sentence makes it applicable to U.S. Empire.

Mon, 08/22/2011 - 08:56 | 1585499 pazmaker
pazmaker's picture

The naivity of some people really cracks me up!!!  and on ZH of all places!


Democratically elected???   Damn I'm glad I was sitting down for that one!!! 


There is nothing free in Venezuela that is all a bunch of bullshit but you keep on going on believing the lies.  The health care is so great Chavez went to Cuba for treatment!!! 

Free to his cronies but don't publicly state you don't support him because you won't get that free stuff.  Protest and strikes going on daily in all parts of the country.  Black market for everything from food to clothes to anything else you really need.


Change the constitution with your cronies that you have placed in government and your paid off judges so you can run for reelection when the constitution forbids it!


Yes Chavez the great father of democracy!!!  Our hero!!!  He really has a lot of people dupped doesn't he?


Crime so rampant that 23-46 people murdered every WEEKEND in Caracas alone!

Plant drugs on the opposition so you can through them in jail.  Send goon squads out to beat up and harras the opposition.


Close up the little shops in prime areas if the owner doesn't support you and repatriate and hand oout to your cronies!!

Yes Venezuela  paradise on earth!!!!


Yes I too have family in Venezuela as well as Ecuador

Sun, 08/21/2011 - 16:21 | 1583897 midtowng
midtowng's picture

I can't figure out who you are referring to by "despots hiding behind a facade of communism". There are so many candidates to chose from in the world, and Chavez isn't the most obvious choice.

Chavez's move makes perfect sense. Many of his enemies happen to be the same enemies of every gold bug.

Sun, 08/21/2011 - 16:34 | 1583921 DarthVaderMentor
DarthVaderMentor's picture

I completely agree. He is brilliant and he has certainly acted in the best way to further his own interests and possibly those of Venezuela. On the other hand, a brilliant economic action, IMHO cannot be translated into an endorsement of his regime.

Two wrongs don't make a right. He's smart, he's made a brilliant move, and the gold bugs as well as other may suffer because of this at his gain, but that doesn't mean his regime is a valhalla for the Venezuelan people.

Go study your modern Eastern European history. Show me a true communist state that didn't turn out over time to become a dictatorship with an oppressed people and a nomenklatura. Marx was betrayed over and over again starting with Lenin and to date with Fidel.

Mon, 08/22/2011 - 06:38 | 1585268 prole
prole's picture

More like Marx was vindicated from the murder of the Romanovs to Katyn to the Fidelist firing squads, with a layover at "the killing fields." (forgot to mention Katyn II)

Sun, 08/21/2011 - 16:23 | 1583902 Doode
Doode's picture

He is likely to be moving this gold for political reasons - he sees how the unpopular leaders got their assets frozen (Quadaffi, Assad, Mubarak, etc) and so in anticipation of either social unrest and a followed up crackdown or just a general hedge against any future confrontation with West (he is tight with Iran). Think this is more of a politically motivated move than economy. 

Sun, 08/21/2011 - 16:38 | 1583929 tmosley
tmosley's picture

Which one is which?

Seriously, these guys are the same in every way.  They are two different teams playing in the same sports league.

Sun, 08/21/2011 - 17:27 | 1584028 Top_Kill
Top_Kill's picture

A detailed list of countires who hold their own gold like Libya would be helpful when filling out my "Next country to riot and therefore need some US/Euro/UN kinetic action" bracket.

Sun, 08/21/2011 - 19:47 | 1584396 lawrence1
lawrence1's picture

And why do you despise Chavez?  Have you forgotten or didnt realize that Chavez has been elected in clean elections monitored by the international community and also prevailed in a referrendum?  That Jimmy Carter reported he was spit at by members of the elite for his role in monitoring.  Thus, Chavez is as democratic a leader as current US presidents, if not more so because the Republicans stole both Bush elections.  The US political system is totally controlled by the bankers/elite, and thus all the bad press for Chavez who is the only Latin American leader who has successfully taken leadership from the aristocracy.  Read James Petras and learn some history rather than believing all the shit from the US and European elite controlled media.

Mon, 08/22/2011 - 07:25 | 1585324 Dyler Turden II Esq
Dyler Turden II Esq's picture

Anyone who opens free medical clinics for the poor is a socialist DICTATOR and TYRANT.   And an ENEMY OF FREEDOM.  And a THREAT to our way of life.   Don't you know that?

Sun, 08/21/2011 - 23:39 | 1584955 Freddie
Freddie's picture

Hope & Change bitchez. The Kenyan and The Bernank.

Sun, 08/21/2011 - 13:07 | 1583521 johnnynaps
johnnynaps's picture

Do you know where your gold is, bitchez?!

Sun, 08/21/2011 - 13:13 | 1583535 hognutz
hognutz's picture

Buried very deeply, where no Zombie will ever think to look............

Sun, 08/21/2011 - 17:18 | 1584008 zerozulu
zerozulu's picture

I have GPS coordinates, remembered.

Sun, 08/21/2011 - 13:18 | 1583543 DarthVaderMentor
DarthVaderMentor's picture

The paper gold value in the hands of many Americans is going to disappear much like the real estate value because a lot of the real gold will be sitting in the hands of Venezuela guarded by AK-47's and AK-74M's. You can burst an refuge asset bubble two ways...blowing the asset valuations by decreasing value or blowing the holders of the asset by fraud.

Sun, 08/21/2011 - 14:04 | 1583653 Soul Train
Soul Train's picture

My gold is in coins. So is my silver. And every once in a while, I buy a little more, regardless of the price.

I won't sell it. I keep it for doomsday, when any gold and silver coins will be quite valuable. You see, all that paper gold will be worthless. It's the coins that will be commercial.

And few will have it.

Savage times it will be.

Sun, 08/21/2011 - 13:07 | 1583522 schismjism
schismjism's picture

tyler, if could you exactly explain how a democratically elected president like Chavez is a dictator, i would be grateful. such comments make you sound like a moronic state department official.

Sun, 08/21/2011 - 13:25 | 1583567 tgatliff
tgatliff's picture

Chavez is about as "democratically" elected as Ahmaddinejad is in Iran.   Third world countries such as Venezuela have little to no credability in their elections simply because there is not enough legal protections in place to insure a fair election.   My personal belief is that one reason Chavez wants the physical gold back is because his poll numbers are sagging to historic lows, and he wants to insure his own future survival.   Meaning, don't expect all of that physical gold to make it to the central bank vaults.

Sun, 08/21/2011 - 13:57 | 1583639 Troll Magnet
Troll Magnet's picture

and i suppose our elections are credible?

Sun, 08/21/2011 - 15:30 | 1583807 Oh regional Indian
Sun, 08/21/2011 - 14:11 | 1583668 nodhannum
nodhannum's picture

But Jimmah says they are good and fair just like Ahmaddinejad's election.  You don't question the "jimmah" do you?  One must not question what the previous "glorious leader" said or one could be suspect as to what homeland security calls a terrorist.

Sun, 08/21/2011 - 15:37 | 1583785 Whoa Dammit
Whoa Dammit's picture

The leader of any country that does not kowtow to the wants and needs of the multinational corporations is awarded the title of Dictator by the MSM.

Sun, 08/21/2011 - 15:34 | 1583819 sgt_doom
sgt_doom's picture

Quickly troll tgatliff, name for us the two largest voting machine companies in North America and the two ultra-rightwing whackadoodles who just happen to be their owners!!!!

Legal protections, dood???  Explain that to anyone familiar with the predatory jurisprudence system of America, dood!  Thomas Linzey would be most interested in your lame and inarticulate thoughts on the matter.

Are you perchance related to Otto Reich or one of his Cubano henchmen?  Egil Krogh????

 And name what voting software/lobbyist company Robert Gates was a special advisor to prior to becoming SecDef?

Sun, 08/21/2011 - 13:33 | 1583575 Mr. Magniloquent
Mr. Magniloquent's picture

Hugo Chavez rescinds the operating licenses of any media outlet which refuses to capitulate total fealty to Mr. Chavez's agenda. Defiant governers and other representatives are forced out and replaced with compliant sychophants. Chavez frequently exercises the autocratic power of confiscating any private property, as well as dictating all economic policy with Venezuela.

Further examples abound, though I suspect they fall upon deaf ears.

Sun, 08/21/2011 - 14:24 | 1583695 somaplease
somaplease's picture

That is complete horse shit and misleading.

Sun, 08/21/2011 - 15:24 | 1583794 WestVillageIdiot
WestVillageIdiot's picture

Stalin used to receive 100% of the vote in elections.  That is neither horsesehit or misleading.  And who can forget his "victory" over Kirov?  Who counted those votes?

Sun, 08/21/2011 - 15:35 | 1583823 FeralSerf
FeralSerf's picture

"Those who vote decide nothing. Those who count the vote decide everything." - Joseph Stalin

Sun, 08/21/2011 - 15:41 | 1583833 sgt_doom
sgt_doom's picture

Riiiiiiggggghtttt...unlike Amerika, President Chavez doesn't allow a Rupert Murdoch-like Foxtard (Remember him??  Remember phone hacking of thousands and thousands of people???  Or early dementia, perhaps???) news stations, nor does he openly tolerate crooked judges who have ruled in favor of Murdoch's Foxtard News (in several separate court cases at the fed. level) that it is "legal" to fictionalize the "news."

Got that???

Sun, 08/21/2011 - 16:07 | 1583877 A Man without Q...
A Man without Qualities's picture


Please supply evidence for these examples.  I don't think the guy is a messiah, but I know that the wealthy Venezuelans (who had almost total control over the media), the American banks and the oil companies have been trying to get rid of him from the beginning.  The propaganda has been non-stop for years.


Sun, 08/21/2011 - 19:40 | 1584364 malikai
malikai's picture

Obviously this idiot has never seen Venezuelan TV. Try to disinform elsewhere. There's too many of you here already.

Sun, 08/21/2011 - 13:55 | 1583632 Turd Ferguson
Turd Ferguson's picture

schismjism: That is one of the dumbest things anyone has ever posted here. Congratulations.

Sun, 08/21/2011 - 14:25 | 1583700 somaplease
somaplease's picture

You just took first place.

Mon, 08/22/2011 - 06:07 | 1585256 ZeroPower
ZeroPower's picture

Turd, very surprised to read this from you.

Sun, 08/21/2011 - 14:11 | 1583661 treemagnet
treemagnet's picture

Because democratically elected presidents in true democracies don't have planned economies price capping this/that let alone nationalize the industry du jour.  Pull your head outta your'll only sting for a second.

Sun, 08/21/2011 - 15:09 | 1583754 quark
quark's picture

Actually.... planned economies and central efforts to dictate prices is what usually comes from democracy. Democracy is vulgar.... it is the tyranny of the majority.... it is the sublimation of what is right to what is simply popular. Democracy is not freedom. Democracy is two wolves and a lamb voting on what to eat for lunch. Freedom comes from the recognition of certain rights which may not be taken, not even by a 99% vote.

Sun, 08/21/2011 - 15:58 | 1583863 Oh regional Indian
Oh regional Indian's picture

very very well said quark.

Demoncrazy says it better. 

Vivek (ORI)

Mon, 08/22/2011 - 10:58 | 1585906 Boxed Merlot
Boxed Merlot's picture

The US is in theory a republic, i.e. founded on the rule of law.  Perhaps the best form of government may be a benevolent monarchy, but because humans have a mortal flaw in maintianing divine attributes for any sustained period of time, a republic will have to suffice.  imo.

Sun, 08/21/2011 - 15:37 | 1583827 FeralSerf
FeralSerf's picture

Where would one find an example of one of these "true democracies"?

Sun, 08/21/2011 - 15:45 | 1583841 sgt_doom
sgt_doom's picture

treemagnet, are you on seriously heavy drugs, dood???

"..don't have planned economies price capping this/that let alone nationalize the industry du jour..."

Like, the American economy has been centrally planned for years now, and the central planner is named Wall Street!

Price capping?  How where to begin?  With Bill Gates of Microsoft, who paid for a state law capping the salaries of independent contractors?  Shortly before he began shipping as many local jobs as possible to India!  (Dips**t)

Nationalize......with all the free monies given to the banksters, what's left to nationalize???

Talk sense, zombie boy!

Sun, 08/21/2011 - 15:59 | 1583865 Lord Koos
Lord Koos's picture

WTF are you talking about.  Democratically elected leaders have done this many times. Nationalizing the industrial production of a country's natural resources generally tends to help the average person. What would be private profits in a purely capitalist system, are instead shared savings. Check out the price of gas in Venezuela.

Sun, 08/21/2011 - 14:36 | 1583716 gwar5
gwar5's picture

Dictator, because he does what he wants and they can't get rid of him, even as he drags them into hell.

He got elected fairly the first time, but cheated thereafter in elections, ripping up the old constitution, so he could run for life (short one it will be), he arrests opposition reporters, shuts down opposition news stations, instituted marxist indoctrination for students nationwide like castro, he has his propaganda broadcasted a set amount of hours per day, he is confiscating private property of landowners, he is forcing people with 2+ bedrooms to take in strangers off the streets, he has violent thugs from the slums running around beating and killing the opposition (one reason they have the highest murder rate in the Western hemi), 80,000 tons of food rotted in government warehouses so he scapegoated the grocery stores for the food shortage and nationalized them and rationed food with "loyalty" coupons, and so it goes, and so it goes....








Sun, 08/21/2011 - 15:43 | 1583835 FeralSerf
FeralSerf's picture

George W. Bush didn't even get elected fairly the first time.  How does Chavez's murder rate compare with George's murdering over a million Iraqis after he oversaw the murder of 3,000 Americans on 9/11?

Chavez is no angel, but he is a piker compared to come of his competitors.

Sun, 08/21/2011 - 19:46 | 1584388 malikai
malikai's picture

To be fair, Bush had much more resources at his disposal.

Sun, 08/21/2011 - 15:33 | 1583821 snowball777
snowball777's picture

"if could you exactly explain how a democratically elected president like Chavez is a dictator..."

We'd love to help you out, but the people that can answer that question aren't allowed to answer that question.

Sun, 08/21/2011 - 13:10 | 1583531 somaplease
somaplease's picture

WTF TD? Are you just making this shit up cus u r long gold??? /sarc

Sun, 08/21/2011 - 13:14 | 1583537 Eduardo
Eduardo's picture

How comes that a democratically elected and challenged many times with transparent elections is a dictator ?

Well maybe the answer is in why Ron Paul is tagged ineligible by the press, if he dare to win an election it will be branded as dictator. Just sayin ... 

Sun, 08/21/2011 - 13:30 | 1583572 ShouldveLeftHer
ShouldveLeftHer's picture

Chill bro. We still call Obama President. What's in a name? TD makes many grammatical and syntax and punctual mistakes. Not sure if he ever claimed to be all knowing and perfect, but I AM SURE no one else is reporting on this very juicy nugget of info for the phyzz holders. Chill the fuck out on the politics or join Info Wars and unsub here. Bro.

Sun, 08/21/2011 - 13:17 | 1583542 Scottj88
Scottj88's picture

Gold is the Safehaven, Bonds are the Bagholders...

Swiss Franc just hit a new high in gold on Friday....

Let the supercycle begin....

So the question becomes, which is the bubble?  The physical asset with no counter-party risk in which has been a store of wealth for thousands of years and is making all-time highs against most major currencies, or the negatively yielding treasury bonds in which the Federal Reserve has just finished its second round of emergency & exotic bond purchasing policy called Quantitative Easing in order to “stimulate” the economy, which we all know how that is going?

Sun, 08/21/2011 - 13:18 | 1583544 Sheikh Djibouti
Sheikh Djibouti's picture

One man's dictator is another man's freedom fighter. There is a certain level of subjectivity involved in various world views that lead a person to see a government (particularly one far away) in a certain manner either negatively or positively, that comes directly from the influences of the culture in which one lives.

Don't listen to what they say, don't believe what they tell you, but watch what they do.

This looks to me like a move to prepare for the possiblity of having to back currency with gold. Seems smart to me given today's political and economic climates.

Whether you disdain Chavez or not is really irrelevant, as is the title you choose to give him, since what is important here is the intentions behind his decisions and the geopolitical truths it points to.

Sun, 08/21/2011 - 15:27 | 1583798 jplotinus
jplotinus's picture

Quite true. The move is an astute one that has nothing to do with how Chavez is characterized. That said, Chavez was elected by the people of Venezuela.

Sun, 08/21/2011 - 13:18 | 1583545 djchill2
djchill2's picture


Here is an interesting fact.  I serve on a US Navy ship and last week I ahad no problem  accessing ZH at all...a couple of days ago, ZH was blocked.  I contacted my IT department to find out whats up and they had no idea why ZH was blocked and said that it must be blocked from the Navy's central network center.  My ship is still investigating whats happened, but from the looks of it...Deparatment of the Navy...and maybe DOD have decided that knowing the truth about what is happening with the US economic and financial situations is not what they want there US military forces reading...If there are other active duty military here that are still able to access ZH from there DOD computers...please pipe up so I can narrow down what the hell is happening...thanks and keep up the awesome work....BTW...I have been reading ZH since 2008...bought gold at 950, silver at 15.50, and Palladium at 255...yes...I am elated about that...but pissed that the US is spiraling down the toilet....  

Sun, 08/21/2011 - 13:58 | 1583641 doggings
doggings's picture

wouldnt surprise me at all, theyre all over the alternative media. 

The Matrix is watching


Mon, 08/22/2011 - 03:04 | 1585132 doggings
doggings's picture

curious who would click the red on this one..?

whassamatter?  ...didn't you like seeing your surrepticious browsing activities logged quite so clearly? 

Sun, 08/21/2011 - 14:03 | 1583648 speconomist
speconomist's picture

Add ZH to Google Reader and enjoy it without ability to comment.

Sun, 08/21/2011 - 14:58 | 1583750 zero-g
zero-g's picture



I am accessing and posting this from a marine nipr connection in Afghanistan. Granted, they block alot of stuff, but haven't blocked zerohedge yet.



Sun, 08/21/2011 - 15:23 | 1583793 Sudden Debt
Sudden Debt's picture

add the rss to your outlook.

Sun, 08/21/2011 - 13:18 | 1583546 Roger Knights
Roger Knights's picture

"The beginning of a race amongst the world’s Central Banks to grab physical gold?"

Even if they just repatriate it, that would be enough to topple a ponzi.

Sun, 08/21/2011 - 13:19 | 1583547 fiddler_on_the_roof
fiddler_on_the_roof's picture

venezuela has both Oil and Gold. Look at ANOTHER's statement 12 years ago about venezuela


Date: Sat Mar 07 1998 13:19 

What would the impact of this revaluation of gold and currencies do? It would instantly shift economic and financial power into the hands of those who own large amounts of gold: CB's, Saudi's, Roths et al. It would mean that gold/oil would be THE CENTRAL POINTS OF ECONOMIC REFERENCE. It would mean that currencies would be devalued by a factor of 1000 in relationship to the new standard of gold ( as a proxy for oil wealth ) It would upset an awful lot of people. There would be no TARGET to shoot at or take over, however, because all other oil producers would immediately jump on this band wagon. Its a simple matter of what an interested party is willing to receive for their goods. Venezuela, with gold and oil reserves and production capacity, would be one of the wealthiest nations on earth. The world would be turned upside down geopolitically, wouldn't it. Literally "..the 'have-not's of the world will become the 'have's.."


Sun, 08/21/2011 - 13:39 | 1583589 RichardP
RichardP's picture

A stupid man with 10 billion dollars may be the wealthiest man in the world - but he is still stupid.  Wealth is not everything.

Sun, 08/21/2011 - 14:25 | 1583699 Diogenes
Diogenes's picture

If he was that stupid he wouldn't have the money for long.

Sun, 08/21/2011 - 14:35 | 1583713 kkam
kkam's picture

What hubris from a small mind! Whether you like him or not is irrelevant - He has been the President of a country for over 10 years, you a nobody posting anonymously. So who is stupid?

Sun, 08/21/2011 - 13:48 | 1583595 A Man without Q...
A Man without Qualities's picture

OPEC figures on proven oil reserves (billions of barrels)


Saudi Arabia 265

Venezuela 211 

Iran 137

Iraq 115

There's another thing, - with OPEC reserves figures, the method assumes a market value of oil, and reserves can only include that which can be extracted for less.  For a long time, the figure was $35 a barrel, and hence Venezuela was a relative minnow, but this is now $65, I think, and they can include more of the heavy oil deep offshore.  Point is there is more oil out there, which would be economic to extract with oil at say $100, so it is not far wrong to argue that they have larger reserves than Saudi 

This goes a long way to explain why some will always call Chavez a dictator...

Sun, 08/21/2011 - 16:20 | 1583813 DarthVaderMentor
DarthVaderMentor's picture

and some of the best looking women in all of Latin America......going to some of their topless beaches and some of the high end bars in Caracas like the one at the Tamanaco Hotel was certainly a never ending exercise in keeping your hard-on not visible and your tongue in your mouth. Like Brazil and Colombia, the genetic mixture of European, African and Indian blood continually yields some of the most beautiful women in the world.

Sun, 08/21/2011 - 13:19 | 1583549 Caviar Emptor
Caviar Emptor's picture


One player with a decent stack of chips calling the bluff of the biggest gambler at the table.

That about sums up how "the tables turn"

Sun, 08/21/2011 - 15:49 | 1583849 sgt_doom
sgt_doom's picture

If only "dictator" Chavez had convinced his banksters to sell trillions upon trillions of dollars of worthless credit derivatives instead.

If only.....

Sun, 08/21/2011 - 16:22 | 1583900 DarthVaderMentor
DarthVaderMentor's picture



Well said and summed up Caviar.

Sun, 08/21/2011 - 13:20 | 1583550 sudzee
sudzee's picture

In testimony a few weeks back the Bernank said that the FED has no gold, nor does it have any interest in gold just a paper receit. I beleive it was in answer to a question from Ron Paul.

Sun, 08/21/2011 - 13:20 | 1583551 Paladin en passant
Paladin en passant's picture

The market is also pricing in the fact that, with nationalization of Venezula's gold mines, there will be that much less production in the future.  Decreased supply equals increased price. The tin-pot dictator will run the gold mines into the ground as surely as he has most of the rest of the Venezulian economic structure.

Sun, 08/21/2011 - 13:21 | 1583552 Negro Primero
Negro Primero's picture

Viva Chàvez! ...'The Tropical De Gaulle'

Sun, 08/21/2011 - 13:21 | 1583554 Manzilla
Manzilla's picture

Can someone post this where it can be DL'd for free? It seems scribe charges now. Garbage.

Sun, 08/21/2011 - 13:22 | 1583557 fiddler_on_the_roof
fiddler_on_the_roof's picture

some spam regarding ANOTHER's logic  for anyone interested.

Date: Sat Mar 07 1998 13:19 

A Noble Purpose, This Oil For Gold

When one considers the merits of a specialized world oil currency, the thought usually turns immediately to "send in the military and stop them". I must ask, why? If an oil currency is born before or out of the shambles of an financial meltdown, and it offers great benefit to all, again I ask, why stop it? Look at the merits of such a move:

In a very real "currency sense", oil will be devalued in terms of gold. As one makes a currency weaker by increasing the money units per ounce of gold. Oil will become very cheap in gold, as the amount of gold paid per barrel will fall dramatically as compared to today's ratio. There will be much more than enough gold worldwide to quantify a "world oil currency". To that end, the world paper "reserve currency" at use in that time, will continue to be traded for oil at an extremely low price relative to today. The only change will be the addition of a "unit of real value" added to each trade, a "world oil currency", gold! However, in terms of today's currencies, gold will be "upvalued" to perhaps $10,000 to $30,000 an ounce. So as not to rewrite what is already an excellent piece on this coming readjustment, I will repost part of Mr. Allen ( USA ) 's perfect article on the subject along with his requested changes per his :

Date: Mon Dec 15 1997 11:06
Allen ( USA ) ID#246224: 
Date: Sun Dec 14 1997 18:59
Allen ( USA ) ( More ruminations re: ANOTHER's recent posts ) ID#255190:
Last one on this topic until more ANOTHER posts. I'm not sure that it would be necessary to have that large a cabul in on the "offer" of oil for gold. Given the rather small market in gold in comparison to oil/currencies it would only take one or two well endowed oil states to pull this off. Here's why.

Let's say the Saudi's have been accumulating gold through the back door ( approx. 5,000 tonnes ) . They sell say 20 Mln Bbl oil a day. Close enough. At one ounce of gold per thousand Bbl oil that's 10,000 ounces of physical gold per day. That's a lot of physical gold.

The first few moments after the Saudi's proposal to trade oil for gold at a very steep discount of 1000 Bbl/oz ( approx. 1.5% of current US$ price ) there would be roars of laughter. One fast thinker after another would think "Hey. I buy some gold at $300/oz, trade for oil to receive 1 Mln Bbl, then sell the 1 Mln Bbl for US$ 10 Mln. Net profit is

$10,000,000-$300,000=$9,700,000. Easy money." .

Everyone at once turns to the gold market to buy, which promptly shuts down. Now no one is laughing. Because everyone realizes that gold is now worth at least $10,000 per ounce and no one is prepared for that revaluation. Whoever has gold now has 66.67 times the purchasing power in that stockpile. What appeared to be a stupid offer has now become a complete revaluation of all gold stockpiles vs all currencies.

Who has the gold?

( per corrections :Date: Mon Dec 15 1997 11:06 Allen ( USA ) ID#246224: )

Saudi stockpile guest-imate 5,000 metric tonnes = 5,000,000,000 GRAMS not ounces. Gold now at US$9.65 per gram revalued by multiple of 66.67 = US$643.37 per gram x 5 Bln grams = US$3.2 Tln.

Germany 2900 metric tonnes = 2.9 Bln grams, revalued to US$1.8 Tln.

USA 8,085 metric tonnes = 8.1 Bln grams, revalued to US$5.2 Tln.

Is this plausible??? How is it possible by making one little change in oil dealings could this ever happen? It is simply the very intelligent use of the scarcity of gold and the necessity of oil. It is the desire of one party, who is big enough to swamp the gold market, to make it the preferred vehicle for buying oil. In fact if not one ounce of gold is ever transacted for oil, but the offer is continued intact, then gold will be revalued simply by the possibility of trading. Those who are in a bad way in their currency situation can always get oil with their gold.

What would the impact of this revaluation of gold and currencies do? It would instantly shift economic and financial power into the hands of those who own large amounts of gold: CB's, Saudi's, Roths et al. It would mean that gold/oil would be THE CENTRAL POINTS OF ECONOMIC REFERENCE. It would mean that currencies would be devalued by a factor of 1000 in relationship to the new standard of gold ( as a proxy for oil wealth ) It would upset an awful lot of people. There would be no TARGET to shoot at or take over, however, because all other oil producers would immediately jump on this band wagon. Its a simple matter of what an interested party is willing to receive for their goods. Venezuela, with gold and oil reserves and production capacity, would be one of the wealthiest nations on earth. The world would be turned upside down geopolitically, wouldn't it. Literally "..the 'have-not's of the world will become the 'have's.."

Sun, 08/21/2011 - 14:19 | 1583680 CrazyCooter
CrazyCooter's picture

So does it logically follow that gasoline would go from ~$4/gal to ~250/gal?

FOFOA/ANOTHER is interesting reading to say the least, but should this reset occur it will be with a complete economic collapse. Fuel to grow/transport food would be unaffordable and thus food production would cease.

Am I reading this theory wrong?



Sun, 08/21/2011 - 15:13 | 1583776 Motley Fool
Motley Fool's picture

Yes you are reading it wrong.

Sun, 08/21/2011 - 15:41 | 1583812 fiddler_on_the_roof
fiddler_on_the_roof's picture

yes you are reading it wrongly.

Only gold get's repriced, all else remain in same ratio.



Oil priced in Dollar :

1 Barrel = $10

1 oz = $300

So then 1 oz = 30 Barells.


Hypothetical scenario by ANOTHER


Oil priced in Gold.

1000 Barrel = 1 oz

1 Barrel    = 1/1000 0z


if Gold is still priced at 1 oz = $300, we get 1 Barrel = 30 cents, which cannot happen, since the demand is for oil which is priced in Gold, it causes demand for Gold.

So 1 Barrel = $10 remains the same, which translates to 1 oz = $10,000.

All this because oil gets priced in Gold.

So only Gold gets revalued higher, all else remains the same. People still get cheap oil. Gold just obsorbs the value instead of dollar, happening now.



Sun, 08/21/2011 - 13:23 | 1583560 New Survivalist
New Survivalist's picture

Man that is one ugly-looking newsletter. Smart reading, but it looks like my eight-year-old put it together. 


Might as well have used the typewriter and carbon paper and a cheap copier, like Armstrong used in jail. There was something very powerful about reading such intelligence coming in the form of 1970's-style media.

Sun, 08/21/2011 - 13:23 | 1583562 Hubbs
Hubbs's picture

Right on DVM...That about sums up the struggle between the two self rightous social/economic forces: Both corrupted by centralization. Humans evolved in tribes. Some social scientists figure that each human can realistically communicate/trade/ socialize with about 50 or so members before the interpersonal bonds get diluted out. Sorry facebook, I just can't keep 734 friends, much less put that many notches on my gun.

Sun, 08/21/2011 - 13:25 | 1583566 Sudden Debt
Sudden Debt's picture




Sun, 08/21/2011 - 13:35 | 1583582 achmachat
achmachat's picture

imagine all the hell that would break loose if Luxembourg was to pull its 2,2 tons of gold...

Sun, 08/21/2011 - 13:43 | 1583597 Sudden Debt
Sudden Debt's picture

Imagine all the Azian countries want to store their gold in Hong Kong....


Sun, 08/21/2011 - 14:43 | 1583730 SilverRhino
SilverRhino's picture

I doubt that.  China's PLA is a hop, skip and a jump away from seizing all that nice metals right there on the peninsula. 

Singapore or Bangkok of all places makes more sense.



Sun, 08/21/2011 - 13:41 | 1583593 gwar5
gwar5's picture

Rickards was on fire at CNBC the other day bashing the banks and calling for resolution of the debt crises by way of sovereigns breaking up the banks and going to gold standard. 

He even recommended that Germany repatriate their US gold to prevent confiscation. Said it would be an extension of 1933. 

"The banks played, they lost. The G-7 should get together and put it to the central banks. The sovereigns should not be held hostage and make the citizens pay over the next 15-20 years for the banks mistakes, that's the alternative."   -- Jim Rickards. (excuse the slight paraphrase)

Sun, 08/21/2011 - 13:25 | 1583568 The Deleuzian
The Deleuzian's picture

The Gold/Silver producing 'mines' of the globe are now and should most definitely be considered 'banks'....Watch as they start coining their own metal into real 'money'.....

The Dow/Gold ratio has now entered the 3rd-phase, translation?  look for doubling, tripling, of prices.  Nationalization of ore bodies are immenent.

My opinion on illegalization (of Au & Ag) is a scare-tactic at best.  Not enough to throw the plebs into chaos over such a paltry sum.  Nevermind the blackmarket implications

Any euro-bond,QE whatever will only drag out the inevitable.   


Sun, 08/21/2011 - 13:33 | 1583580 Silverballs
Silverballs's picture

a little bully throwing a punch at the big bully should be interesting to see how this plays out over the next year

Sun, 08/21/2011 - 13:35 | 1583583 BennyBoy
BennyBoy's picture

Time for the CIA to try and assasinate him.


Then have the NY Times put a false story about his "death" on the front page.



The Gold Cartel is more competent than the incompetent boobs at the CIA.


Watch out, Hugo-A-Go-Go!

Sun, 08/21/2011 - 15:54 | 1583857 sgt_doom
sgt_doom's picture

"The Gold Cartel is more competent than the incompetent boobs at the CIA."

Evidently you missed that bungled attempt in London on that whistleblower awhile back????  The attempted autocide....traffic ramming?

Naaaahhhh....since the privatization is almost complete, they would have to go to either Booz Allen, SAIC, Mantech, Raytheon, Lockheed Martin et al. for the sanctioning, but for the present the aforementioned have their hands full with Anonymyous consistently penetrating them.



Sun, 08/21/2011 - 13:36 | 1583586 Negro Primero
Negro Primero's picture

..oops, bringing back the gold to Venezuela,,, by plane:

Las barras de oro las “traeremos por una vía aérea”

12:43 p.m. | Emen.- El presidente del Banco Central de Venezuela, Nelson Merentes, aseguró que las barras del oro se traerán, no de una sola vez, “por una vía aérea”.

Agregó que por supuesto “no vamos a traer las mismas barras que se llevaron”, señaló además que hay un protocolo universal “muy estricto para el manejo del oro de un país a otro”.

Se comprometió a traer el metal precioso lo más rápido posible. Agregó que la “metodología está establecida. Los objetivos están claros proteger los otros activos”

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