Commodities, Currencies, Emerging Markets, Frontier Markets, Metals

Venezuela Said To Be In Gold For Cash Talks With BofA, Credit Suisse

GoldThe cash-strapped nation of Venezuela — who is now deemed as a nation threat to the U.S. — is said to be in talks with Wall Street investment banks in gold for cash talks, Reuters reported on Tuesday.

The Central Bank of Venezuela is in talks with Wall Street investment banks to create a gold swap that would allow it to monetize around $1.5 billion of the metal held as international reserves, Reuters said, citing government sources that were familiar with the matter.

Under the proposed swap agreement, Venezuela’s Central Bank would provide 1.4 million troy ounces of gold in exchange for cash, a source at Venezuela’s Central Bank told Reuters, adding that after four years, the Central Bank would be able to buy back the gold.

The Venezuelan government sources told Reuters that the Bank of America and Credit Suisse were the investment banks that were involved in the talks.

A source linked to Venezuela’s finance ministry told Reuters that “work is being done to complete this operation toward the end of April.”

Chavez GoldThe bulk of Venezuela’s reserves is said to be held in gold following a move by late President Hugo Chavez who began shifting central bank assets away from the U.S. dollar into gold during the 2008 global financial crisis.

Venezuela faces a cash crunch amid a plunge in oil prices and hefty debt obligations that include the maturity of a 1 billion euro bond this month and coupon payments of nearly $700 million in April, Reuters noted.

On Monday, The U.S. declared that Venezuela is a threat to national security and ordered targeted sanctions against seven officials.

Barack Obama issued and signed an executive order on Monday that declared a “national emergency” amid the “unusual and extraordinary threat” to national security and foreign policy of the U.S. posed by the situation in Venezuela.

The move came amid growing tensions between the two nations as the diplomatic dispute has become the worst since Venezuelan President Nicolas Maduro assumed office in 2013.

Maduro is facing a number of challenges on his domestic front in Venezuela, including a contracting economy, low oil prices, surging inflation, dwindling foreign currency reserves, mounting debt, the risk of a sovereign default, an unhappy electorate, shortages of basic foods and household products, and social unrest.



  1. Pingback: China Set To Loan $10 Billion To Cash-Strapped Venezuela | EMerging Equity - March 23, 2015

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