Venezuela Ships Gold Bars to Iran to Prop up its Domestic Oil Industry

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The Venezuelan government is currently emptying its gold vaults and moving the bullion bars to Iran. It is expected that roughly 9 tons of gold has already been moved in April alone.

When financial turmoil hits and shows no signs of improving anytime soon, desperation will kick in sooner or later. In Venezuela, the liquidation of gold assets is a very interesting development, and one that will benefit Iran. 

Venezuela Desperately Needs Money

Over the past few years, it has become apparent  how Venezuela is going through an increasingly rough patch financially. The country has been plagued by hyperinflation, and the local fiat currency continues to decrease in value and purchasing power on a nearly daily basis. 

Because of all this financial turmoil, the country’s government is actively looking for avenues to attract foreign money. Most of these efforts have not been too successful as of yet, thus desperation has started kicking in. 

A seemingly last ditch effort has been launched in recent weeks. The Venezuelan government is currently emptying its gold vaults and moving the bullion bars to Iran. It is expected that roughly 9 tons of gold has already been moved in April alone. The amount of gold is worth nearly $500 million and serves as a “down payment” for Iran’s help in reviving Venezuela’s oil industry.

As a result of these shipments, Venezuela now has far fewer foreign reserves. For a crisis-ravaged country with very few hard currency assets, that is not a favorable situation by any means. If this gamble does not pay off, Venezuela may face a whole new set of financial problems. 

An ongoing “collaboration” between Venezuela and Iran has been in place for years now. Both regions face severe US sanctions and have been looking for ways to circumvent the situation. Most efforts to date have been rather unsuccessful, this working together more closely is one of the last viable options to explore.

Both parties stand to gain from this partnership, however. Venezuela needs a cash injection following the oil price collapse triggered by the coronavirus crisis. Iran, on the other hand, gets a different source of revenue on its hands. 

Not a Long-Term Solution

When looking at the bigger picture of Venezuela’s financial problems, it is evident that selling gold to Iran is only a temporary fix. While it can be beneficial in the short-term, further depleting national reserves is not a viable plan for the future.

In fact, the gold owned by Venezuela is more important than ever before. It is one of the only sources of wealth in the country today, and even that source is drying up very quickly. There is still over 60 tons of gold in the country’s vaults, but that supply will not last indefinitely either. 

All of these developments are part of an ongoing power struggle between President Maduro and National Assembly leader Juan Guaido. The NA leader wants to transition into a government that has the support of the United States, Europe, and Latin American nations alike. 

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