According to data released by the Swiss customs department on
Tuesday, Venezuela has net exported 12 tonnes of gold to Switzerland in
February 2016. In January Venezuela net exported 36 tonnes of
gold to Switzerland, in total 48 tonnes was moved in the first two months of
this year.
On 16 March 2016 BullionStar
researcher Ronan Manly reported “Venezuela
exported 12.5 tonnes of gold to Switzerland on 8 March 2016, via Paris”,
based on an article by newspaper El Cooperante.
Establishing, Venezuela has net exported at least 60 tonnes of gold year to
date.
Venezuela’s economy is in a tight spot. The country suffers from
triple-digit inflation and Credit Default Swap (CDS) data shows that traders
see a 78 % chance on default. The foreign exchange reserves of
Venezuela declined by 12 % to $13.6 billion US dollars in February, from
$15.5 billion US dollars in January of 2016. In an effort
to avoid catastrophes Venezuela’s central bank has a strong motive
to employ its official gold reserves.
The gold imported by Switzerland must have been supplied from
the official gold reserves of Venezuela’s central bank – Banco Central
de Venezuela (BCV) – either as sales or swaps. Documents
by the US Geological Survey show
Venezuela’s annual gold production stands at approximately 12 tonnes, which
is insufficient to be responsible for the large shipments in recent
months.
The Swiss customs department publishes trade statistics by weight and
value. When using the average monthly gold price to compute the estimated
fine gold content from the weight and value disclosed, it shows the gold
exported by Venezuela since December 2013 was roughly “99.5 % pure” (see
the grey dots in the chart below). In the wholesale gold market bars have a
minimum fineness of 995 per 1,000 parts. Data from Switzerland’s trade
statistics implies the metal imported from Venezuela is wholesale bullion
from the BCV, not mine output that has a lower fineness.
According to Eurostat no EU member has imported any gold from
Venezuela in the past years – Eurostat’s data is updated until December 2015.
International Merchandise Trade Statistics provider COMTRADE
reports Venezuela hasn’t exported any significant tonnages of gold to
countries outside of Europe in recent years either – COMTRADE data is updated
until November 2015. However, trade statisticsdo not grant how much gold is,
or is not, crossing borders around the globe. Gold can
cross international borders without appearing in trade statistics. As an
example, we
know the BCV shipped an unspecified quantity of gold out of Caracas to an
international destination on 2, 3 and 7 July 2015, while these shipments
cannot be traced in any trade statistics at my disposal.
How much unencumbered
gold the BCV has left is unknown. For sure Venezuela’s official gold
reserves are not as much as the World Gold Council portraits.
According to the Council the BCV still holds 361 tonnes as of Q4 2015, though
the balance sheet at the BCV website from
November 2015 states “Oro [gold] monetario 69,147,656,000”, which is
worth $11 billion US dollars at an official exchange rate of 0.16.
This equates to roughly 296 tonnes of gold, at a nine months rolling average gold
price of $1,152.68 an ounce (which is how BCV gold is valued, pointed
out by Ronan Manly). According to the BCV website,
Venezuela’s official gold reserves declined by roughly 60
tonnes from February until June 2015 (from 361 tonnes to 301 tonnes).
The 296 tonnes of monetary gold, as per November 2015, are not
fully unencumbered, as the central bank has entered into swaps (of
at least 50 tonnes) with bullion banks that provided the metal
to remain on the BCV’s balance sheets.
According to my estimates the upper bound of the BCV’s unencumbered
gold reserves, as of 9 March 2016, is 152 tonnes, the lower bound is 0
(zero). The upper bound estimate is based on the official gold holdings of
Venezuela in February 2012 at 366 tonnes, assuming all was unencumbered at
the time, after which I have subtracted:
- Venezuelan (995 fine) gold exports to Switzerland in
2013 at 8 tonnes. This gold could have been involved in a swap,
leaving the metal on the BCV balance sheet, while it should be
subtracted from Venezuela’s unencumbered reserves.
- Venezuelan gold exports to Switzerland in 2014
at 12 tonnes. Again, this could have been gold involved in a swap,
leaving the metal on the BCV balance sheet, while it should be
subtracted from unencumbered reserves.
- The 50 tonne gold swap between
the BCV and Citibank executed in April 2015 for a tenor of 4 years.
Presumably this swap included the 50 tonnes the BCV had already
stored at the Bank Of England. The gold in question remained on the BCV
balance sheet according to the website the Venezuela Analysis.
- A 60 tonne decline shown on the balance sheet of the BCV
from February 2015 until June 2015.
- Venezuelan gold exports to Switzerland in September,
October, November and December 2015 at 24 tonnes in total. This
could have been gold involved in a swap, leaving the metal on the
BCV balance sheet, same as in 2013 and 2014.
- Venezuelan gold exports to Switzerland in January,
February and March 2016 of 60 tonnes in total.
The calculation excludes the volumes of:
- The unspecified
quantity of gold exported out of Caracas to an international
destination on 2, 3 and 7 July 2015.
- The gold swaps between BCV and the Bank for
International Settlements carried out “in recent years”, as
reported byReuters
in February 2016 (these deals can be related, for example, to
the exports to Switzerland performed in 2013 and 2014)
- The gold swap with Deutsche Bank in early 2016, as
reported by Reuters
in February 2016 (this deal can match the exported metal in January
or February 2016).
In theory the lower bound of the BCV unencumbered gold reserves
is zero, as the three points above can have caused an additional
decline in unencumbered reserves of 152 tonnes, or the central bank has sold
or swapped significant tonnages we don’t know about.
Please read my post “GOFO
And The Gold Wholesale Market” for an explanation of swaps.
More references about Venezuela’s official gold reserves can be found
in previous posts on BullionStar Blogs:
Venezuela
exported 12.5 tonnes of gold to Switzerland on 8 March 2016, via Paris.
By Ronan Manly, 16 March 2016.
Venezuela
Exported 36t Of Its Official Gold Reserves To Switzerland In January. By
Koos Jansen, 19 February 2016.
Venezuela
says adiós to her gold reserves. By Ronan Manly, 1 November 2015.
Venezuela’s
Gold Reserves – Part 2: From Repatriation to Reactivation. By Ronan
Manly, 14 May 2015.
Venezuela’s
Gold Reserves – Part 1: El Oro, El BCV, y Los Bancos de Lingotes. By
Ronan Manly, 13 May 2015.