Friday, 19 August 2011

Venezuelan President Hugo Chavez Sends Precious Metal ETFs A Wakeup Call (GLD, IAU, SLV, GDX, AGQ)

OK. Let the fun begin! Today Venezuelan President Hugo Chavez announced that it planned to nationalize his countries gold mining industry in an attempt to increase its international reserves. This is not an unprecedented move. He has already nationalized the banking industry, telecommunication companies, the oil fields, the producers of power for the country and millions of acres of farm land. President Chavez said that the nationalization of the gold industry was to protect the people of Venezuela from having their gold fall into the hands of the mafia and smugglers.

It was reported in The Wall Street Journal that Mr. Chavez said “we don’t only have oil wealth; we also have one of the largest reserves of gold in the world so we might as well convert it into our international reserves because gold is increasing in value.”
While Venezuela is a relatively minor player on the world stage, this could be a big game changer here in the United States because one of the banks that holds 10.6 tons of Venezuela’s gold is none other than JP Morgan. In a recent audit of JP Morgan’s holdings it was reported that they held 338,303 ounces of gold or roughly 10.6 tons. While this is a modest size deposit it is sure to cause some jitters at JP Morgan as they scramble to find the replacement gold which has already been pledged about 100 times across various paper markets to ETF’s like the SPDR Gold ETF (NYSE:GLD).

[Posted at the SpookyWeather blog, August 19th, 2011.]

No comments: