Show Hide image

Chávez to nationalise gold reserves

The Venezuelan President, Hugo Chávez, has announced plans to renationalise the country's gold.

The Venezuelan President, Hugo Chávez, has said he will nationalise the country's gold mines and convert gold into international currency reserves. As the US and European currencies founder, many investors are turning towards gold as a "safe haven". Gold is now valued at $1,795, or £1,084, an ounce.

Chávez's moves also have an ideological aspect: the socialist president wishes to invest his country's reserves in some of the so-called 'BRIC' economies - Brazil, Russia and China - that he considers friendly to his regime. He has criticised global dependency on the dollar in the past, and his nationalisation of the gold industry will be seen as a step away from reliance on the US currency. The move will make China, in particular, happy.

Next month, Venezuelans will see a ten per cent wage increase, after a raise increase of 15 per cent in May. The average monthly salary in Venezuela is now £220. Although the Venezuelan economy is suffering from extremely high inflation, at 25 per cent a year, the rising price of oil has benefitted South America's largest exporter of oil.

Venezuela has recently introduced price controls in an effort to curb inflation and ensure affordable healthcare, passing a Law for Fair Costs and Prices. Private healthcare facilities earlier this week agreed to a three-week price freeze, as the government seeks to shore up its stretched public health system.

Chávez, who is seeking re-election next year, announced the plans for the renationalisation of gold on state television, upsetting the Canadian-based, Russian-owned company Rusoro - the only foreign firm involved in the Venezuelan gold industry.