Venezuela sold gold last year amid crippling dollar shortage

Venezuela’s central bank sold nearly six tons of gold in the second half of last year as the country faced crippling dollars shortages due to US restrictions on oil exports.

The sales are revealed in the central bank’s financial statements published on the institution’s website. The operations were mostly carried out in December, according to estimates by Caracas-based consultant Sintesis Financiera.

The administration of Donald Trump ratcheted up restrictions on Venezuelan oil exports last year, before seizing the first oil tanker on Dec. 10. The embargo dried up the supply of dollars into the Latin American country, sending the gap between the official and parallel exchange rates to a record high and threatening a return to hyperinflation.

Still, following the capture of President Nicolas Maduro in January by US special forces, the US has allowed some dollars from the sale of Venezuelan oil to trickle back into the country. That has revived the official foreign exchange market and narrowed the gap with the parallel rate. From the central bank’s statements, it doesn’t appear that the institution sold any gold in January, according to a report by Sintesis Financiera published on Monday.

Despite the gold sales, the value of Venezuela’s total reserves grew 30% in dollar terms last year, mostly due to a surge in precious metal prices. The rally in prices was also reflected more quickly after authorities shortened the time span used to calculate the average price of the metal.

“That gave a sense of strength, and that’s why you saw the evolution of total reserves rebound so much,” said Tamara Herrera, head of Sintesis Financiera.

Central bank reserves are one of the few data points that is regularly published by Venezuelan authorities. Key indicators like the consumer price index haven’t been released in years, while figures on economic growth are irregular and incomplete. Venezuela’s gold reserves have dropped more than 80% in the last 12 years, according to data compiled by Sintesis Financiera, as the authoritarian rule of Nicolas Maduro grappled with an unprecedented economic crisis.

An important chunk of Venezuela’s current gold position is held at the Bank of England. However, the country cannot access these funds because the UK has not recognized its government since 2019. That position has remained unchanged following Maduro’s capture by US forces.

“The external sector is in shambles,” said Jose Manuel Puente, a Venezuelan economist and associate professor at IE University in Madrid. “Without financial assistance, there is no possibility of stabilizing the foreign exchange market.”

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