Money and Markets

Venezuela is going to fetch its R8 billion of gold at the Bank of England

Business Insider US
Gold bars are seen at the Czech Central Bank on Se

  • Reports say that Venezuelan officials are in London to meet with senior Bank of England staff over gold repatriation.
  • Venezuela is seeking to take back 16.5 tons of gold reserves currently held in the Bank of England's vaults.
  • Venezuelan finance minister Simon Zerpa, and central bank governor Calixto Ortega Sanchez are reportedly set to meet Bank of England Deputy Governor Dave Ramsden on Friday.
  • Britain's central bank is seeking "clarity" before returning the metal.

Senior officials for the Venezuelan government have reportedly travelled to London for crunch talks with the Bank of England as they seek to repatriate more around R8 billion of gold back to Caracas.

The government of Venezuelan President Nicolas Maduro in early November approached the Bank of England about removing roughly 16.5 tons of gold from the central bank's vaults and returning it to South America. Emerging market nations frequently store gold reserves in foreign central banks.

At the time the request was first reported, Reuters said that the Bank of England had "sought to clarify" Venezuela's intentions in taking back its gold. It now appears that officials, including Venezuelan finance minister Simon Zerpa, and central bank governor Calixto Ortega Sanchez, have come to London to provide further clarity, according to Reuters.

See also: Venezuela really wants its R8 billion worth of gold back from the Bank of England

City AM reports that Bank of England Deputy Governor Dave Ramsden will attend a meeting with the officials, but that it is unclear if Governor Mark Carney will be in attendance. Reuters reported that it was "not immediately evident" if any meeting would actually take place.

The Bank of England declined to comment.

The expected meeting has drawn criticism from British politicians, with Conservative MP reportedly writing to Carney and Chancellor of the Exchequer Philip Hammond, asking the pair to call off any contact with Venezuelan officials.

"Were such a meeting to take place it would pose a significant reputational risk to the Bank and may be in violation of US Treasury-imposed sanctions," Lewer wrote in a letter, reported by City AM.

See also: Venezuela's inflation rate just hit 830,000% — and it's going to keep rising

Venezuela has in recent years been a major seller of gold, and this year alone it has sold about 26 tons, worth some R12.7 billion million, to Turkey. In the past four years, Venezuela's gold reserves have decreased to about 175 tons from about 400 tons, Reuters reported, citing statistics from the country's central bank.

Venezuela has been selling its sizeable gold reserves, built up under Hugo Chavez, to try to address the economic crisis plaguing the country. Hyperinflation of goods means everyday items are unaffordable for many Venezuelans, and poverty and violence are widespread.

Most recently, its drive to repatriate gold has been related to sanctions announced by the US aimed at disrupting the South American country's gold exports.

President Donald Trump in November signed an executive order to bar US persons from dealing with entities and people involved with "corrupt or deceptive" gold sales from Venezuela.

A report from the International Monetary Fund in July said Venezuela's economy was expected to contract by about 18% this year, while inflation was forecast to reach a whopping 1 million percent.

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