Venezuela’s gold in limbo amid tug-of-war at the Bank of England

As one of the world’s largest custodians of central bank gold, the Bank of England is attracting unwanted attention in a bizarre saga involving 14 tonnes of Venezuela’s gold.

A whole cast of colorful characters has recently emerged on both sides, those wanting the gold to be returned and those wanting the gold to be confiscated.

In early November news was placed into the British media (Reuters and The Times) revealing that the Bank of England in London, one of the world’s largest custodians of gold bars on behalf of other central banks, was refusing to allow the withdrawal and repatriation of 14 tonnes of gold belonging to Venezuela’s central bank, the Banco Central de Venezuela (BCV).

According to these media reports, the delays / refusals by the Bank of England to allow the Venezuelan gold repatriation ranged from excuses about the prohibitive cost of transport insurance to concerns about future money laundering. In all cases, these excuses were bogus, as I explained in the article “Bank of England returns 14 tonnes of gold to Venezuela” on the BullionStar website, dated 15 November, and that the real reasons for the Bank of England’s refusal were political. As I stated at the time in my conclusion:

The reasons put forward by official sources in the Reuters and Times articles for why Venezuela can’t withdraw its gold from the Bank of England are clearly bogus. The more logical and likely explanation is that the US, through the White House, US Treasury and State Department have been liaising with the British Foreign office, HM Treasury to put pressure on the Bank of England to delay and push back on Venezuela’s gold withdrawal request.”

According to the Reuters report dated 5 November, the Venezuelan central bank gold withdrawal plan had “been held up for nearly two months”, which would put the original withdrawal request by the BCV to the Bank of England at a date in at least September and probably earlier. So the BCV had been looking for its gold back for sometime, and the Bank of England was stalling. One reason the Bank might have been stalling was to wait for the introduction of US Executive Order 13850 which was signed on 1 November, imposing US economic sanctions on anyone doing business with the Venezuelan gold sector.

As far as the BCV’s gold withdrawal request and the Bank of England’s refusal, nothing much happened in the public domain until early December when there came a flurry of news and activity showing that the Venezuelan custodied gold matter at the Bank of England was far from resolved, and indeed that the heat had been turned up a few notches by both sides.

Julio Borges and Carlos Vecchio, political opposition figures in Venezuela who sent a letter to the Bank of England

Borges and Vecchio appeal to Mark Carney

First up was a letter to the Bank of England Governor Mark Carney, dated 30 November, from two dissident figures of the Venezuelan political opposition, Julio Borges and Carlos Vecchio. Borges is a former Venezuelan national assembly (legislature) president and also founder of Venezuelan political party Primero Justicia (Justice First). Vecchio is co-founder of and coordinator for another Venezuelan political party Voluntad Popular (Popular Will).

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