Venezuela is nationalizing gold mines and repatriating gold reserves. Is this no big deal with regard to the world economy, or is Chavez intentionally destabilizing global fiat capitalism? More important, what will be the impact?
Keyholez, what’s your read?
As I understand it, gold mining is really not that important an influence on the price of gold because almost all of the gold on the planet has already been mined. And in fact, if you were really bullish on the price and owned a mine, you wouldn’t want to do any mining — it’s more economical to just let it sit in the ground and get more valuable every day. I’m guessing that that’s not what Chavez is going to do, though — he’s too hungry for revenue sources to be able to take the long view. But I don’t know much about him, so I could easily be wrong.
To me, the repatriation part is more interesting. I don’t think it will have any immediate impact, but it does indicate a real fear that the latest round of American/European debt misery is not just going to get muddled through, and the ramifications will be ugly enough that governments will start stealing each other’s gold and daring them to do something about it. Making sure you actually have custody over the gold you think you own seems like a smart move, even if you don’t think the scenario is particularly likely (especially when you’ve seen some of the paranoid (?) rumors on the internet to the effect that states have leased out a lot of the bullion that they claim to have in various vaults).
That would be the “Chavez is crazy like a fox” interpretation, but all the “MSM” accounts seem to suggest something lamer — that he’s just going to sell some of the gold and give it to his cronies or something, and this is easier to do without worrying about the paper trail at the Bank of England or something. I dunno. There is something reassuring, in a scary way, about the idea that Russia, China, Iran, and maybe Venezuela are cold-bloodedly rational in all of their policies, but maybe even that view is too hopeful to be realistic.
