Venezuela in for 'costly' gold transfer: ex-bank chief

CARACAS: Venezuela's plan to repatriate its gold reserves from Europe and the United States, one of the largest transfers of the precious metal, will be costly and take time, a former central bank chief said Friday.

Firebrand leftist President Hugo Chavez said Wednesday he was ordering some 211 tonnes of physical gold held overseas and worth around $12.3 billion back to Caracas out of concern for its security as the West battles a brutal economic slump.

Venezuela has the 15th largest gold reserves in the world, with an estimated total of 365.8 tonnes, according to the World Gold Council. Bringing the overseas reserves, most of which are held in London at the Bank of England, back to Venezuela would involve moving around 17,000 standard 400-troy-ounce (12.4-kilogram) bars.

"This will take place gradually, over several weeks if it happens effectively," said former central bank chief Jose Guerra, noting that the transport of the gold bricks may take several trips for maximum safety.

"They will need to pay very high shipping and insurance costs," he told AFP.

Current central bank and Finance Ministry officials were not immediately available to comment on this massive operation.

In justifying his move, Chavez had declared that the "world financial crisis has swallowed many banks in North America and Europe, and so we must take measures to save the international reserves of all Venezuelans."

He also indicated he was drafting a law to allow the state to take over gold mining to prevent "mafias" from exploiting the country's natural resources.

The announcement came less than a week after the price of gold hit a record high of more than $1,800 an ounce as investors flocked to the safe haven amid market volatility fueled by the eurozone debt crisis.

Chavez has frequently vowed to take over the gold sector in order to curtail environmental destruction and illegal mining, which accounts for 60 percent of local production.

"We will nationalize gold and we will convert it, among other things, into international reserves, because gold keeps increasing in value," Chavez said.

Gold producers in Venezuela are already bound by a 2009 law to sell 60 percent of their production to the country's central bank.

The Venezuelan president also announced his government was planning to recuperate $6.2 billion dollars in cash or exchangeable bonds kept in Swiss, British, French institutions or transfer some of the funds to "friendly" countries like China, Russia and Brazil.

Copyright AFP (Agence France-Presse), 2011