Today, Hugo Chavez said gold was “highly strategic.” Roll the tape, Venezolana de Television. I’m going to give a lengthy translation so you can see how these things go:
Last night I was studying the topic of gold, Jorge. [Camera focus on Finance Minister Jorge Giordani.] Gold. We need to be conscious of what we have. Not many people know, hey [Communications Minister Andres] Izarra, I am sure you don’t know. Almost nobody knows in Venezuela, what are our gold reserves. They are there in Guayana. Elias, write a decree-law to declare gold “highly strategic for national development.” We’ll start there, with a framework law, decreed. So, it turns out we are one of the first countries in the world in gold reserves. And number one in, that’s gold underground, Jorge. And also one of the first in reserves of gold as part of the international reserves. It keeps growing.
Now this doesn’t necessarily mean that the law will be written or decreed, and a decree doesn’t mean that people with gold claims in Venezuela should run straight to their lawyers. But it can’t be pleasing to the ears of the friendly folks at Rusoro Mining (RML.v), the only active publicly traded gold miner, or the various other holders of concessions.
Also noting: the $100 an ounce that gold has lost in the past couple days is going to do interesting things to Venezuela’s foreign reserves. If the reserves are indeed 60% gold bullion (as I heard recently), and gold falls by 5%, that entails a 3% drop in foreign reserves. Ouch. And while some goldbugs are hedged by US dollar holdings, Pres. Chavez ordered Venezuela to get rid of that dying currency years ago. Ouch. Oh but don’t worry, gold goes up in both inflation and deflation.
Hearty hat tip for sending the link: Kepler.