Economic context
The economy of Venezuela is highly dependent on oil export revenues, which account for about 90% of its total export revenues. Therefore, the fall in oil prices in 2013 caused a drop in the government revenues. A major economic crisis then began. Hyperinflation hit the country and is still plaguing the entire Venezuelan economy today.
Political context
A social crisis also exploded as a result of the economic crisis that began in 2013. This social crisis led to diverging political ideas and benefited Juan Guaidó, the Speaker of the National Assembly of Venezuela. Since early 2019, he has been seen as the interim President of Venezuela by many governments.
In short, there are currently two Presidents competing in Venezuela: Nicolás Maduro, re-elected in 2018, and Juan Guaidó, self-proclaimed and supported by the United States.
The importance of gold for Venezuela
In this particular economic and political context, Venezuela is trying to survive.
In addition to its abundant oil deposits, Venezuela also possess extremely rich gold deposits.
Venezuela is experiencing a real economic war, mainly because of its decision to not rely on the United States anymore.
Due to its gold deposits and the necessity to circumvent US sanctions targeting their oil exploitation, Venezuela has no choice but to sell or swap gold in order to avoid liquidation.
Therefore, gold is the only resource available in Venezuela to repay its debts and enter into negotiations.
Gold and its downsides
Gold is another one of the main reasons behind the conflict between Nicolás Maduro and Juan Guaidó.
Indeed, the struggle for power between Nicolás Maduro and Juan Guaidó does not only take place in the streets of Caracas or the cozy salons of the embassies. Part of their confrontation happened in a safe at the prestigious Bank of England, in London.
Venezuela wanted to repatriate its $1.2 billion worth of gold bullion stored in the Bank of England by fear of collapsing because of the sanctions it was facing.
Given the risk of seeing this strategic reserve falling into the hands of his rival, Juan Guaidó wrote to Theresa May and the Governor of the Bank of England, Mark Carney. He asked them to refuse Nicolás Maduro’s request for repatriation.
Nicolás Maduro’s request was later denied by the Bank of England.
This event clearly demonstrates the impact of gold on Venezuela and its necessity. It is indeed gold that will decide for the political and economic future of the country.
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