Economy

How Venezuela turns its useless bank notes into gold

EL CALLAO, BOLIVAR STATE, VENEZUELA (REUTERS) – Venezuela’s most successful financial operations in recent years have not taken place on Wall Street, but in primitive gold-mining camps in the nation’s southern reaches.

With the country’s economy in meltdown, an estimated 300,000 fortune hunters have descended on this mineral-rich jungle area to earn a living pulling gold-flecked earth from makeshift mines.

Their picks and shovels are helping to prop up the leftist government of President Nicolas Maduro. Since 2016, his administration has purchased 17 tonnes of the metal worth around $650 million dollars from so-called artisan miners, according to the most recent data from the nation’s central bank.

Paid with the country’s near-worthless bank notes, these amateurs in turn supply the government with hard currency to purchase badly needed imports of food and hygiene products. This gold trade is a blip on international markets. Still, the United States is using sanctions and intimidation in an effort to stop Maduro from using his nation’s gold to stay afloat.

U.S. sanctions have hammered the nation’s oil industry and crippled its ability to borrow. The formal mining sector has been decimated by nationalization. So, Maduro has unleashed freelance prospectors to extract the nation’s mineral wealth with virtually no regulation or state investment.

Mining accidents are common in these ramshackle operations, workers said. So are shootings and robberies.

Maduro has also received a crucial assist from Turkish President Recep Erdogan, a fellow strongman who has likewise sparred with the Trump administration.

Venezuela sells most of its gold to Turkish refineries, then uses some of the proceeds to buy that nation’s consumer goods, according to people with direct knowledge of the trade.

Turkish pasta and powdered milk are now staples in Maduro’s subsidized food program. Trade between the two nations grew eightfold last year.

But scrutiny is intensifying as Venezuela’s politics reach the boiling point. In recent days, many Western countries have recognized Venezuela’s opposition leader Juan Guaido as the South American nation’s rightful president.

Additionally, Maduro’s adversaries have called on foreign buyers of Venezuela’s precious metal to stop doing business with what they say is an illegitimate regime.


Associated Links

  • Countries
  • Venezuela
  • Economy of Venezuela
  • El Callao
  • International organizations
  • Americas
  • Crisis in Venezuela
  • Economic policy of the Nicolás Maduro administration

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