Venezuela Sitting on 2nd Biggest Gold Reserve on Earth — Maduro

Reuters  Shannon Stapleton

Reuters Shannon Stapleton

The move is thought to be a response to recently announced sanctions by the USA, which are aimed at disrupting the South American country's gold exports.

According to Reuters, Venezuelan authorities have approached the Bank of England in an attempt to repatriate about 14 tons of gold bullion now held in the bank's vaults. The UK regulator has reportedly sought to clarify what Venezuela plans to do with the gold. Their offical source only clarified that plans to move the gold had been held up for almost 2 months because of insurance difficulties.

The South American country is now dealing with one of the worst economic crises in history, going through a fifth year of recession and an annual inflation of more than 400,000 percent.

Maduro says his government is victim of an "economic war" led by the opposition and fuelled by Washington's sanctions. Lack of hard currency can create shortages of basic goods ranging from staple foods to drugs and automobile parts.

A new round of anti-Venezuelan sanctions was introduced by the White House last week.

The deepening economic crisis in Venezuela means its government wants to get back its gold reserves worth around R8 billion.

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This is quite a blow for a country like Venezuela that has sold the same amounts worth of gold to to Turkey in this year alone.

Selling the gold directly from the Bank of England to a foreign buyer would be logistically easier than shipping it, but could also risk running foul of sanctions.

The country's gold reserves have fallen to about 400 tons from 575 tons and it appears the government is considering selling more. In 2011, Venezuelan socialist leader Hugo Chavez repatriated almost 160 tons of gold from the U.S. and some European countries. Their nearly $700M worth of gold now sitting with the Bank Of England.

Since 2014, Venezuela has been using its gold as collateral to get billions in loans from global lenders.

Venezuelan central bank statistics show the central bank's gold holdings by June this year had dropped to 160 tonnes from 364 tonnes in 2014, as some of the swap agreements expired without Venezuela returning the funds - leaving the gold in the hands of the banks.

Caracas has been looking to wean itself off of the US-dominated financial institutions and instruments, ditch the dollar and turn to euros and the yuan for worldwide settlements month amid multilayered U.S. sanctions Venezuelan officials have described as "illegal".

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