CARACAS -- A plan to sell “little ingots” of Venezuela gold announced by embattled head of state Nicolas Maduro Monday night met with skepticism from experts and ordinary citizens alike.
It has been uphill for Maduro to explain, implement and/or get the Venezuelan population to support a slew of measures -- including a new devaluation, pegging the national currency to a crypto banned in the U.S., higher and/or new taxes and more expensive gasoline -- announced August 17th: the government has admitted it has had to arrest upwards of 200 small business owners and their employees for being unable, or unwilling, to comply with new price controls.
And people are not getting on board with the gold plan, either.
“You know like the Spaniards did to Native Venezuelans? Exchanging trinkets for gold nuggets? Well, that’s what the new plan will be like” a financial journalist told a colleague Tuesday morning. "You will never see the actual gold...yeah, that's right, only paper. Aha. And guess who will be custodian of the gold? Yeah, the Central Bank! Isn't that crazy!", she continued explaining on the phone.
Maduro tried hard to sell the plan Monday night however. “The hour has arrived to save in gold, let us make our savings in gold”, he said during a televised speech touting the gold-based “National Savings Plan”. Even if Venezuelans only make a monthly minimum wage equivalent to $30 (at the official exchange rate, 12% lower at the parallel rate), the precious metal will be made “of free access” to all comers, regardless of a starting price of $64 for a 1.5 gram wafer.
However, and as it seem to be very often the case with the government’s plans, there’s a catch: The “pequenos lingotes” Maduro talked about will not physically be made available to buyers, he admitted near the end of his speech, only gold certificates. The Central Bank of Venezuela will be the custodian of the actual metal, although BCV head Calixto Ortega Sanchez appeared surprised by the bit of news and declined to explain the plan even after Maduro prodded him, on live television, to do so.
A larger wafer, of 2.5 grams, will be also available for $105. But only on paper, of course.
Maduro seemed enthusiast although he did not say how much gold total will the plan entail.
“I am prepared, I have several thousand pieces so that the Venezuelan people can save in gold,” Maduro added.
Explosive liquidity, brought on in part by 24 minimum-wage hikes in under five years, triggered hyperinflation by ate last year. Local analysts such as the Econometrica consultancy head Henkel Garcia pointed out to LAHT the need for an instrument to mop up excess liquidity if hyperinflation is to be stopped or at least slowed down some.
The International Monetary Fund said weeks ago that hyperinflation in Venezuela (the only present case in the whole world at the moment) will clock in at 1 million percent in 2018. U.S. expert Steve Hanke expects a more conservative 60,000%-plus.
The BCV however, stopped publishing inflation figures in 2014. Venezuelan international reserves are currently below $8.5 billion from a record of $43 billion in 2009, according to the Central Bank.
And those paper gold certificates -- When you redeem them, you will not get gold or even dollars. If you get anything, it will be bolivars at the official foreign exchange rate.