Venezuela plans to transfer its gold reserves from the Bank of England to New York
The Venezuelan government and the opposition are close to reaching an agreement to transfer the country’s central bank’s gold reserves, worth approximately $4 billion, from the Bank of England to the Federal Reserve Bank of New York.
Reuters notes, however, that it has been unable to independently confirm the details of the agreement.
Under the proposed terms, the interim government led by Delcy Rodríguez would gain legal control over the gold but would not be able to sell these reserves immediately. Instead, the reserves could potentially be used as collateral for government borrowing, in particular to finance recovery efforts following the massive earthquakes that struck Venezuela in June.
Last month, the president of Venezuela’s National Assembly, Jorge Rodríguez, stated that the government is working to repatriate the gold reserves held in the Bank of England’s vaults.
According to Reuters, this amounts to approximately 31 metric metric tons of gold worth about $4 billion. Venezuelan authorities view these assets as a potential source of funds for the country’s recovery amid high inflation and the aftermath of natural disasters.
The reserves remain frozen due to an ongoing dispute over who has the legal right to dispose of the gold.
The Bank of England has not transferred the approximately 31 metric tons of gold to Venezuela for several years. The dispute escalated in early 2019 after the United Kingdom and a number of other countries recognized Juan Guaidó, then the leader of the Venezuelan opposition, as the country’s legitimate president.
The decision was made against the backdrop of a political crisis in Venezuela and disputes over the 2018 presidential election, which Nicolás Maduro won.
Since then, the right to control the gold reserves has been the subject of a long-running legal dispute in the United Kingdom.
The proposed agreement could be one of the first concrete outcomes of the negotiation process between Venezuela’s interim government and the opposition, which is supported by the United States. If finalized, it could also put an end to the seven-year legal dispute over the gold reserves.
However, according to the Financial Times, there are no immediate plans to sell the gold. One possible use for it is to secure loans against the reserves to finance government needs and aid in recovery efforts following the June earthquakes.
Venezuelan authorities have already emphasized the need to recover international assets to combat economic problems. Reuters reported that in July, annual inflation in the country reached 575.9%, while the monthly rate stood at 19.9%.
The final terms of the agreement on the transfer of Venezuela’s gold are still being negotiated, and the transfer of the reserves will also depend on legal procedures in the United Kingdom.
This was reported by the Financial Times, citing sources familiar with the negotiations.
The spot price of gold rose 0.8% on Wednesday, September 16, to $4,328.39 per ounce as of 03:10 GMT. Market participants were awaiting the U.S. Federal Reserve’s decision on interest rates, while oil prices were falling.
Global gold prices rose on Friday amid weaker oil prices, but the precious metal was still heading for a weekly decline. Investors were awaiting U.S. consumer inflation data, which could influence expectations regarding the Federal Reserve’s future monetary policy.
