WTF: Is Venezuela Paying Off Russian Debt with 20 Tons of Central Bank Gold Reserves?

Journalist:
January 30, 2019

To much of the rest of the world, Venezuela remains a mystery. It’s hard to understand how a country with the largest oil reserves on the planet can’t afford to feed its people.

But then, Venezuela also has a government that devalues its national currency by 95% from one day to the next. And pays its pensioners in Petro. So perhaps it’s not entirely unimaginable that Maduro is using national gold reserves to cancel its Russian debt. Or is it?

The answer to that question, like so many others, rather depends on whom you believe. Indeed, in this day and age marked by fake news and data manipulation, it’s hard not to question the reality of most things–from the U.S. 2016 government elections to 9/11.

A Game of Whispers

Yesterday, Venezuelan lawmaker Jose Guerra posted a tweet that sparked 70 comments and almost 4k retweets and likes so far. It’s clear that when he speaks, people pay attention.

What he said (more or less) was that he wanted to advise people that the BCV was preparing to do dealings with gold. He didn’t know for what but felt that the country had the right to know. The people could then decide whether it was the right move or not.

Bloomberg jumped on the story, which immediately turned into a game of Chinese whispers.

The reputable news source reported that Guerra had “dropped a bombshell on Twitter,” saying that the Russian Boeing 777 that landed in Caracas on Monday was there to “spirit away 20 tons of gold from the vaults of the country’s central bank.”

That’s actually not what he said. In fact, that’s a long way off what he said. Perhaps Bloomberg could use the help of a Spanish translator.

Guerra’s information came to him directly from the National Assembly.

They tagged him in a tweet on Tuesday informing him that officials from the Venezuelan Central Bank (BCV) had informed them that an airplane from Moscow had arrived and was waiting to take away at least 20 tons of gold.

That’s where the 20 tons of gold came from… And the airplane… And Russia.

Not directly from Guerra as Bloomberg stated.

Now, this is where the whole story already gets messy. The news broke off the back of a tweet that never existed.

So, by the time it made the headlines in the U.S., it had already been diluted. Whispered from sources inside the BCV to sources inside the National Assembly to Jose Guerra to Bloomberg. Who then said that Guerra “provided no evidence” of how he knew this.

Yet the evidence was there on the social media platform all the time.

Who is Jose Guerra Anyway?

Most people have heard of Maduro, Venezuela’s despot leader. If you’ve been keeping up with the binge-worthy series, you probably even know about Juan Guaido who swore himself in as President last week. Whether that’s legal or not is entirely another question, although it’s rather unusual without a democratic election or military coup. Latin America is no stranger to these.

But exactly who is this Juan Guerra?

Is he just another member of a cast of characters to rival a Hollywood movie set? Maybe. But he’s also a credible one in a country that’s losing it fast.

He’s a lawmaker and economist who used to work at the Central Bank. One can speculate that he keeps some contacts on the inside. And that the National Assembly hold him in high esteem since they’re the ones who tagged him with the news on Twitter.

Note that it was the National Assembly that allowed Guaido’s ascension to power when they announced their takeover of executive powers. All backed by the United States, of course.

Venezuela’s Rising Debt with Russia

With a scarcity of everything from toilet paper to paper bills, plenty of Venezuelans are turning to extreme measure to ride out the worst humanitarian crisis of their time.

Some professionals are sleeping on the streets from Monday to Friday since they can’t access enough money to commute back to their homes. Others are fleeing over the Colombian border and taking on any work they can find.

Plenty more are turning to cryptocurrencies like Bitcoin to preserve some semblance of their wealth and make some everyday payments.

Venezuelans can use Dash in a growing number of places throughout the country including the popular Church’s Chicken. While bitcoin volume trading on LocalBitcoins is hitting new record highs weekly.

Local peer-to-peer bitcoin trading volume charts from coins.dance

Now that the country’s dwindling reserves are being further eroded by U.S. sanctions, Venezuela’s leader is climbing into a deeper bed with Russia. And Putin has somewhat of a reputation for being a vengeful mistress.

But if all you’ve got is oil (and digital currency backed by oil) that nobody wants, you turn to any resources you can get.

That includes taking loans from mafia-style governments and paying them with the country’s gold reserves, which, by the way, Venezuela has been trying to increase for years now, even diverting military funding to mining.

Gold Bars By Any Means

Last week, the Bank of England had to deny Venezuelan officials from withdrawing $1.2 billion of gold stored there when U.S. officials lobbied the UK to cut off Maduro’s access to overseas assets.

So perhaps it’s not surprising that there are 20 tons of BCV gold bars sitting in a plane waiting to wing their way over to Moscow.

But can the Venezuelan government really just take a sizable chunk of the central bank’s gold reserves and load them onto a Russian plane?

Who knows. Venezuela is a growing mystery to us all and its people are paying the price.

Christina Comben @christinacomben

Christina is a fintech writer and crypto reporter with a fascination for tech and a passion for starting interesting conversations. When not at her computer, you can find her surfing a wave or drinking Rioja.