Ravaged by Oil’s Collapse, Venezuela Now Has a Big Gold Problem

Venezuela’s reserves could fall bellow $15 billion if gold prices fall further or if the government decides to liquidate some of its holdings, according to Sarah Glendon, the head of sovereign research at Gramercy Funds Management. In April, Caracas-based newspaper El Nacional reported that the central bank swapped $1 billion of its gold reserves for a cash injection. And in 2012, then President Hugo Chavez repatriated most of the country’s gold reserves. Venezuela has drawn down reserves about $1 billion a month this year to counter the drop in oil prices, Morgan Stanley said in a note to clients last month. “It’s a question of what weighs more in their mind: servicing their debt or holding their gold in Caracas?” Gramercy’s Glendon said from Greenwich, Connecticut. “It’s going to be extremely challenging for Venezuela to get another source of dollars.” More…