Venezuela selling gold to Goldman Sachs

[pmbug]

Venezuela’s El-Nacional is reporting that Venezuela has signed an agreement with the Vampire Squid to swap or exchange 1.45 million oz of the country’s international gold reserves effective Oct 2013, with the agreement running through Oct 2020.

The gold reportedly is currently being held at the Bank of England, and will be PHYSICALLY DELIVERED TO GOLDMAN SACHS in exchange for US dollars from Goldman.
...

More: http://www.silverdoctors.com/venezuela-to-sell-or-swap-1-45-million-oz-of-gold-to-goldman-sachs/

Two thoughts:

- Shit really is hitting the fan in Venezuela.

- Why is Goldman Sachs buying physical gold while telling folks spot is going to drop 15%?

 

[pmbug]

Instead of pawning its gold, Venezuela should try demanding gold as payment for its oil. The banks would start paying Venezuela monthly protection money just for the country's refraining from doing that.

* * *

Goldman, Bank of America Pitch Venezuela Gold Deals to Drum Up Dollars

By Michael J. Moore, Corina Pons, and Nathan Crooks
Bloomberg News
Wednesday, November 27, 2013

http://www.bloomberg.com/news/2013-...pitch-venezuela-deals-to-drum-up-dollars.html

Goldman Sachs Group Inc. and Bank of America Corp. are among Wall Street firms that offered deals to help Venezuela obtain U.S. dollars amid a plunge in the nation's foreign reserves.

A swap proposed by Goldman Sachs would provide $1.68 billion in cash and be backed by $1.85 billion of the central bank's gold, documents obtained by Bloomberg News show. Bank of America said it could be an intermediary for $3 billion in payments to firms seeking U.S. dollars, documents show. Neither deal has been completed, a government official with direct knowledge of the matter said, requesting anonymity because the talks are private.
...

http://gata.org/node/13305

 

[ancona]

This doesn't make sense to me. Venezuela is pretty large and her tens of millions of residents desperately need dollars with which to conduct trade, so this billion and a half is little more than a rounding error in the financial picture. There is something else brewing here. If Venezuela required all trade to be conducted in dollars or gold, and if they increased oil production by a mere 15%, they could have all the dollars they need to stabilize their economy. What Maduro is doing now only pushes him farther in to the rat-hole. Nationalizing all business in the name of "fairness" is the first step toward the destruction of the country.

 

[DCFusor]

Well, it started earlier when they effectively nationalized all their oil production and therefore all the skilled people who know how to deal with that tar they call crude left. It's a joke when they say they won't sell us oil - we alone have the only refineries that will take that nasty crap - they don't, or they could sell gasoline etc. After getting pretty badly screwed, none of the oil majors really want to deal with them...and here we sit, watching the rest of the dominoes tumble.

Ancona, you of all people should know that increasing something just 15% can be a real near-impossibility....when it's a struggle to just keep it even. They're barely able to do the capex to stay even. There are limits in most systems.

 

[ancona]

Yeah, I know DC, but the point I was driving for is that since nationalization, their oil production has crashed. Not all their reserves are bitumen, so one would think that if the brain drain has crippled the more difficult to deal with oil production, why not ramp up production on some sweeter shit that would bring in more money? Crashing out their currency, introducing currency controls and taking over businesses that have no choice but to buy black market dollars to survive merely destroys any remain9ing desire the people may have to produce anything. Fuck it, why not just put everyone on welfare and be done with it. That is after all, their goal. Maduro needs to catch a bullet. When those who do not produce begin to dictate what and where with everyone else's money, the shows over, because those that can leave, will simply leave and those who remain will starve.

 

[DoChenRollingBearing]

...

Not long ago I met a Venezuelan guy who is looking at doing spare parts business there. He told me that spare parts are very hard to come by, and that Maduro's (Chavez's) cronies have made it much harder than before. And that Venezuela is much worse off than, say, 15 years ago (I have been twice to Caracas, very briefly in both cases, but not recently).

For them to do such a GS-gold deal (and I have no details), indeed Venezuela must be about to go off the cliff. I am surprised that Venezuela would trust GS, but as I mentioned I do not know any details (perhaps the key detail: where is the gold kept in the interim?)

***

YES, it is very hard to raise oil production by 15% quickly. They will likely be LOSING production in the coming year or two even if they were to invite China in to help them out. Maybe they will invite the Iranians and/or Russians in, now there's a comforting thought.

My personal thinking is that the USA need do nothing. Venezuela's .gov will come apart on its own. China or Russia come in? Well, the USA could work out a deal with Taiwan, Japan, Turkey, Poland, etc. Good for the goose is good for the gander...