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Tuesday, January 22, 2019

URGENTđź”´ Venezuela Recovers Gold Swapped With Deutsche Bank…And Guess Where The Gold Ends Up?

Venezuela gold holdings in Bank of England soar on Deutsche deal -sources

CARACAS, Jan 21 (Reuters) - Venezuela’s gold holdings in the Bank of England have jumped after it closed out a gold swap deal with Deutsche Bank, according to two sources, as Britain remains reluctant to release gold held for the troubled OPEC nation.
The government of Nicolas Maduro has since last year been seeking to repatriate about $550 million in gold from the Bank of England on fears it could be caught up in international sanctions on the country.
Its holdings at the bank more than doubled in December to 31 tonnes, or around $1.2 billion, after Venezuela returned funds it had borrowed from Deutsche Bank AG through a financing arrangement that uses gold as collateral, known as a swap, one of the sources said.
Under the deal struck with Deutsche Bank in 2015, Venezuela put up 17 tonnes of gold in exchange for a loan, according to one of the sources who asked not to be identified because it is not authorized to speak publicly about the issue.
The country’s gold holdings fell to 134 tonnes in November compared with 150 tonnes at the start of 2018, according to central bank statistics.
This is in part because Venezuela last year started carrying out gold barter operations with Turkey to import food following U.S. sanctions that have made international banks reluctant to handle Venezuelan transactions.
The motivation for paying back the funds from the Deutsche swap was not immediately evident. But redeeming the swap would give Venezuela more gold for barter operations with Turkey.
Deutsche Bank declined to comment. Venezuela’s Central Bank did not reply to an email seeking comment.
The Bank of England did not immediately respond to a request for comment. When queried about Venezuela issues in the past, it has said it does not comment on customer operations.

POLITICAL PRESSURE

The Bank of England is facing political pressure from Venezuela’s opposition and from members of British parliament to not assist Maduro, whose just-begun second term has been widely described as illegitimate.
Losing the gold would be a significant blow to the country’s finances by undermining Venezuela’s ability to obtain hard currency crucial to importing items ranging from food and medicine to auto parts and consumer electronics.
But refusing to hand over the gold, which belongs to Venezuela’s central bank, could cause alarm among countries that store their own bullion in the Bank of England’s coffers.
Maduro’s government is struggling under hyperinflation now approaching 2 million percent annually, and a broad economic collapse has fueled an exodus of some three million people since 2015.
Opposition critics, including exiled leader Julio Borges, have argued that the gold should not be repatriated because it could be used to finance corruption.
Calixto Ortega, president of Venezuela’s central bank, met with Bank of England officials in December to discuss repatriating the gold but was unable to convince them, according to sources familiar with the situation.
Venezuela for decades stored gold that makes up its central bank reserves in foreign bank vaults, which is common among developing nations.
The country’s late socialist leader Hugo Chavez, citing the need for Venezuela to have physical control of central bank assets, in 2011 repatriated around 160 tonnes of gold from banks in the United States and Europe to the central bank in Caracas.
Maduro says his government is victim of an “economic war” led by the opposition and fueled by Washington’s sanctions. His critics blame the country’s struggles on a state-led economic model, stringent exchange controls and nationalization of private companies. 
Venezuela to Refine Gold in Turkey Amid US Sanctions – Report
The South American country stopped refining its gold in Switzerland in 2017 amid fears that it could become subject to US or EU sanctions. Washington did indeed impose sanctions on Caracas' gold reserves in November 2018.
Venezuela plans to refine tons of gold in the central Turkish province of Corum and has sent a delegation, led by Venezuelan Minister of Industries and Production Tareck El Aissami, to assess the gold refining facilities and conduct negotiations, Turkish newspaper Yeni Safak reported. The results of the delegation's mission will later be reported to Maduro, the outlet added.
In 2017, Venezuela stopped refining gold in Switzerland and in 2018 announced the repatriation of its gold reserves from the UK amid concerns that it could be frozen under US or EU sanctions. Also in 2018, Caracas sent around $834 million worth of unrefined gold to Turkey.
The US has imposed several rounds of sanctions against Venezuela in recent years, limiting its oil and gold trade. The latest batch was introduced on 8 January 2019, targeting several individuals and entities. Maduro slammed the sanctions as "economic persecution" and noted that his country would not bow to threats and orders from economic "oligarchs" in Washington. Venezuelan Opposition Urges Bank of England not to Return Gold to MaduroThe call comes after reports emerged that the Venezuelan government is looking to repatriate gold bars worth about $550 million from the Bank of England out of fear that the holdings may be affected by US sanctions announced by President Trump early last month.
Venezuelan opposition leaders Julio Borges and Carlos Vecchio have urged the Bank of England not to hand over $550 million worth of gold to Venezuela.
In a letter to the bank, they claimed that Venezuelan President Nicolas Maduro would either pocket the gold or use it to illegally imprison and get rid of the government's opponents.
Borges and Vecchio, who currently live in self-proclaimed exile, also warned that if the Bank of England allows Maduro to repatriate the gold, it will further violate the bank’s legal obligation to fight money laundering and corruption.
The letter came after Reuters cited sources as saying in early November that the Venezuelan government is seeking to repatriate 14 tons of gold bars worth about $550 million from the Bank of England over concern that the holdings may be affected by US sanctions.
On November 1, US President Donald Trump imposed new restrictive measures against Venezuela, specifically prohibiting US companies and individuals from buying the Latin American country's gold.
Maduro accused Trump of "schizophrenia" and pledged that Caracas would not "kneel down before American imperialism."
According to Maduro, the Venezuelan government is in the process of certifying 32 gold fields which would turn Venezuela into "the second largest gold reserve on Earth." With both public and private sector investment, the government is also building 54 gold processing plants.
In July, Venezuelan Minister of Ecological Development and Mining Victor Kano said that in light of the agreement that was signed this year with Ankara regarding the processing of gold, gold ore mined in Venezuela will be sent to Turkey for processing, purification of impurities and casting of gold bars. Venezuela was ordered by a Canadian court in 2016 to compensate Canada-based Crystallex International Corporation for having nationalized its gold mining operations.
The Canadian company had demanded that Venezuela be forced to auction off its principal foreign asset, the U.S.-based Citgo Petroleum Corp refining business, but a settlement was reached. On Nov. 23, according to a filing in the Ontario Court of Justice, Caracas completed an initial payment of $425 million, mostly in the form of "liquid securities".


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