“The market in physical gold is tiny, and largely comprised of nut cases.”

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Turns out transporting 211,000 kg. of gold to Caracas isn’t exactly straightforward. The basic problem is insurance. Felix Salmon has the skinny:

 I have no idea how many insurers there are in the world who would be willing to take on this job, but it can’t be very many, and it might well be zero. If Venezuela wanted just one five-ton shipment flown to Caracas in conditions of great secrecy, that would be one thing. But Chávez’s intentions have been well telegraphed at this point, making secrecy all but impossible. And even if the insurer got the first shipment through intact, there would be another, and another, and another — each one surely the target of criminally-inclined elements both inside and outside the Venezuelan government. Gold is the perfect heist: anonymous, untraceable, hugely valuable. Successfully intercepting just one of the shipments would yield a haul of more than $300 million, making it one of the greatest robberies of all time. And you’d have 39 chances to repeat the feat.

Hat-tip: Rafael

1 COMMENT

  1. It just all seems such a huge waste of time, energy & resources in a purely political move that will have a negative result.
    With the way they have been hammering away at this one can only conclude that it is a huge fraud & that very quickly it will disappear here.

  2. Of course the real irony is that Becks ranting about buying gold makes perfect sense if you are ruled by someone like Chavez.

    Chavez promotes gold through his hairbrained schemes, Beck just promotes it. I got to say I respect Beck more, at least he is an honest salesman and is asking you for your money and gives you a real physical product in return. Chavez takes your money and gives you nothing.

  3. Quick economics question: What happens if Chavez loses the election in 2012, his cronies scramble like cockroaches, and the new administration finds that the gold reserves have been significantly dwindled? I don’t think it’s completely out of the question that he would send some gold to his pals.

  4. “But Chávez’s intentions have been well telegraphed at this point, making secrecy all but impossible.”

    They did try to keep it a secret.

  5. There is a basic flaw in the whole argument: It has been done before and by Venezuela. This gold was sent abroad in February 1989 in two cargo planes. So, there is nothing that unusual about it, maybe they can even find teh guy from the Cuarta who arranged the whole thing.

    • First question, MO, how much gold was transferred then? Undoubtedly that 211 tonnes can be transported in two or three flights, nonetheless it’s a question of risk whether or not to put all the eggs in two or thirty two baskets.

      However, now that the cat is out of the bag, the risk has grown exponentially, all the bad guys are licking their chops!

      One commenter over at Reuters had a really good comment about how a Steven Seagal movie could be made out of this!

      • 80 Tons on February 20th.1989 and 70 Tons the next day. My only point is that the whole dramatic argument of the article, that this has never been done in recent memory is simply wrong. Including the fact that no facility has to be built, most of the gold was at the BCV to begin with. In any case, I bet you “doble contra sencillo”, that they will leave some of it abroad. Not to do so would be silly, the reason it was exported was to use it in case it was needed as a guarantee for loans or to sell part of it in case it was needed. In fact, part of that gold was actually used as a guarantee for a loan at a time that Venezuela only had about US$ 400 million in reserves when Lusinchi left the Government. Funny, I remember when I was a little kid, maybe not even so little, hearing how it was so good that 10% (or 20?) of reserves was gold, worth all of US$ 400 million. That is that same gold.

  6. Whatever the insurance costs, Venezuela can afford it. If my calculations are right they’ve made at least $10 billion profits (albeit unrealized – they should start selling this stuff) over the past 3 years.

    Chavez might have missed his true calling of being a financial adviser.

    • Ow, what did you smoke? Afford with what money if everything goes downs the drain?
      Venezuela hasn’t collapsed because but for 2008 oil prices have kept increasing bloody year after bloody year. Please, take a look at this per year:

      http://www.opec.org/opec_web/en/data_graphs/40.htm
      Just one year and it rebounded and only on the second year, when a new record was broken, could Venezuela report some ilusory GDP growth. Do you think oil prices will keep rising forever? And you call Chavez financial adviser because of the gold Venezuela has?

      Geez…man

    • In real terms the previous bubble in gold in 1980 was higher than now, the gold was not sold either. There has always been this myth in Venezuela that you don’t sell the gold. By the way, this gold was mostly taken, stolen, whatever you want to call it, when the Government banned the practice of local banks issuing their own currency backed by its own gold. Some banks sued and won the suit in the 90’s and had to be paid.

      As for Chavez being a good financial adviser, after reading Merentes and him say that gold can only go up, I say, time to go short.

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