Just over a year ago, cash-strapped Venezuela quietly conducted a little-noticed gold-for-cash swap with Citigroup as part of which Maduro converted part of his nation’s gold reserves into at least $1 billion in cash through a swap with Citibank.
As Reuters reported then, the deal would make more foreign currency available to President Nicolas Maduro’s socialist government as the OPEC nation struggles with soaring consumer prices, chronic shortages and a shrinking economy worsened by low oil prices. Needless to say, the socialist country’s economic situation is orders of magnitude worse now.
According to El Nacional, “the deal was for $1 billion and was struck with Citibank, which is owned by Citigroup.”
As Reuters further added:“former central bank director Jose Guerra and economist Asdrubal Oliveros of Caracas-based consultancy Ecoanalitica said in separate interviews that the operation had been carried out. A source at the central bank told Reuters last month it would provide 1.4 million troy ounces of gold in exchange for cash. Venezuela would have to pay interest on the funds, but the bank would most likely be able to maintain the gold as part of its foreign currency reserves.”
We note this peculiar gold swap case because something curious took place overnight. On the same day that Venezuela announced it would seize a local Kimberly-Clark factory after the US consumer-products giant announced it would shutter its Venezuela operations after years of “grappling with soaring inflation and a shortage of hard currency and raw materials”, Venezuela’s President Nicolas Maduro said on Monday that Citibank planned to shut his government’s foreign currency accounts within a month, denouncing the move by one of its main foreign financial intermediaries as part of a “blockade.”
“With no warning, Citibank says that in 30 days it will close the Central Bank and the Bank of Venezuela’s accounts,” Maduro said in a speech, adding that the government used the U.S. bank for transactions in the United States and globally.
In typical bluster, Maduro added: “Do you think they’re going to stop us with a financial blockade? No, gentlemen. Noone stops Venezuela.”
What Maduro did not mention is that among the central bank accounts closed by Citi will be at least one, rather prominent, gold swap launched just over a year earlier.
With the OPEC nation’s economy immersed in crisis, various foreign companies have been pulling out or reducing operations. However, few of them held over $1 billion in Venezuela gold as hostage.
Full article: Did Citi Just Confiscate $1 Billion In Venezuela Gold (Zero Hedge)