According to various newswire reports, Venezuelan President Hugo Chavez plans to nationalize his country’s gold mining industry and repatriate 211 tons in gold reserves from North American and European banks. At last night’s settlement in December gold on the Comex, $1,822/ozt, Venezuela currently has $11.2 billion of reserves in the vaults in banks abroad.
Given how Chavez has butchered his country’s oil cow since coming into office (February 1999), it is not unreasonable to suggest he will do the same with Venezuela’s gold reserves.
According to the CIA World Factbook, oil revenues, account for roughly 95% of Venezuela’s export earnings, about 55% of the federal budget revenues, and around 30% of GDP.
The year prior to Chavez taking office, IPE/ICE Brent crude oil averaged $13/b. Over Chavez’ term in office to date, Brent has averaged $54/b; it has averaged $80 since 2006.
Yet, despite this bonanza, the Venezuelan economy suffers. The country’s economy contracted by 1.9% last year. In other words, Chavez squandered the opportunity of a lifetime.