According to reports from The Associated Press, Venezuelan President Hugo Chavez formalized the nationalization of the South American country’s gold mining industry early this week in response to rising concerns about the value of the U.S. dollar.
It remains unclear how the new decree differs from the country’s 1965 law that nationalized gold mining and led to the government granting itself exclusive rights to extract gold in 1977. Earlier this month, Chavez announced the beginning of a Venezuelan effort to bring the country’s worldwide gold holdings back to its central bank.
An AP article last week reported that Venezuela’s central bank said the country has about $17.9 billion in gold out of a total of more than $28.6 billion in international reserves; $11 billion worth of the gold is held in other countries.
“At the time of these disturbances, it’s preferable to recover our assets, in this case the gold, and have it here in the vaults,” Venezuelan Central Bank president Nelson Merentes said last week.
Chavez said the Tuesday formalization of Venezuela’s nationalized gold industry will enable the government to further bolster its reserves by shutting down illegal mining operations and conducting mining exploration and exploitation through “mixed business” models which are partnerships between government and private mining operations.
Unrelated to Venezuela’s gold mining nationalization, The Wall Street Journal reports that the price of gold fell today to $1,787 an ounce. Though the price drop is the most drastic for the precious metal in recent months, gold still remains at one of its highest prices in history.