Kitco News Monday November 25, 2013 3:33 PM
On Wednesday, markets were surprised following reports that the Venezuelan government entered into a gold swap agreement with Goldman Sachs. Under the potential agreement the government would put up 1.4 million ounces of gold to secure a loan worth 90% of the value of the yellow metal. Analysts at CPM Group say the swap agreement shouldn’t impact markets, but the deal was interesting because of how much gold is involved in the transaction. The research firm says the terms of the agreement “is a sign of desperation on the part of the government and a stunning reversal of ‘triumphant’ repatriation of its gold it staged in 2011 and early 2012.” The analysts add “the Venezuelan government has systematically destroyed the economy with wrong-headed policies.” CPM group points out that inflation is running around 48% - 50% and the country’s economic growth has almost been halted, bouncing around 0.5% - 2.6%, down from around 10% per annum growth rates prior to 2007.
By Neils Christensen of Kitco News; nchristensen@kitco.com
