Hugo Chavez, the controversial President of Venezuela, can now be added to the growing list of gold investors across the globe.
On Wednesday, Chavez announced plans to nationalize Venezuela’s gold industry, including extraction and processing, and to use the output to increase the nation’s reserves, according to a report from Reuters.
The report noted that “The move follows a dispute between his government and foreign miners who say the rules limiting the amount of gold that can be exported from the South American nation hurt their efforts to secure financing and create jobs.”
In a phone call to state television, Chavez stated that “I have here the laws allowing the state to exploit gold and all related activities … we are going to nationalize the gold and we are going to convert it, among other things, into international reserves because gold continues to increase in value.”
Chavez went on to say that “We’ve managed to increase the international reserves. We have close to 12 or 13 billion dollars in gold reserves. We can’t allow it to continue to be taken away,” a reference to gold reserves held in foreign banks.
The report also cited information from an opposition legislator in Venezuela that “the government’s top finance officials were recommending the repatriation of 90% of Venezuela’s gold reserves held abroad.” Furthermore, the report contended that Venezuela has $29.1 billion in total international reserves, of which 63% is in gold worth $11 billion held overseas and $7 billion held domestically.
While Chavez’s decision could be looked at as a bearish indicator for gold from a contrarian perspective, many other nations have added to their gold reserves in recent years and have seen the price of the yellow metal continue to move upward.