The value of
gold has increased drastically over the past few years during this world-wide recession. People are buying gold left and right like it's a disappearing commodity. Well, when you look at latest
Hugo Chavez's demand for 211 tons of Venezuelan
gold, it might really be a disappearing commodity.
Now, while the operation of transporting 211 tons of
gold poses a security headache and enormous expense for Venezuelan Central Bank - US, Canadian, British and Swiss credit organizations have a different kind of headache. Apparently, they do not have enough gold on hand.
JP Morgan,
Barclay's, and the
Bank of Nova Scotia should cough up some 99 tons of gold and last check of physical gold inventory in JP Morgan's vault showed only 338,303 total ounces of gold or 10.6 tons and guess how much Venezuelan gold is stored at JP Morgan? You are right, exactly 10.6 tons! Well, it is sure to cause some jitters at JP Morgan as they scramble to find the replacement gold.
The decision by the South American leader comes at a time when the price of gold is soaring and it's currently over $1,800 an ounce! Venezuela is a proud owner of 365.8 tons of gold and it looks that it does not want potentially "unfriendly countries" taking hold of it.
While he might get this idea based on seizure of all
Gaddafi's assets in western countries, he might have missed a couple of important lessons!
1. Single country, with no nuclear arsenal, can not fight against combined might of western alliance.
2. Having a lot of oil does not make you all-powerful. It can make you rich, but that will not help you once bombs start raining on your palace.
If Chavez insist on this move as well as transferring $6.3 billion in cash reserves,to unnamed Russian, Chinese and Brazilian banks, I would not be surprised to see Venezuela receiving the
Gaddafi/ Libyan treatment very soon. Watch out for news on human rights violations in
Venezuela!