Socialist leader Hugo [OOgo] Chavez demanded in August that Venezuela’s gold be sent to it for safekeeping. The first delivery has taken place.
It is customary for nations to leave their gold in storage, either in London or at the New York Federal Reserve Bank. It is rare for any nation to take delivery.
Chavez apparently thinks that the official storage centers are not safe. Or maybe he has some other use for this gold. Whatever his reasons, he has drawn attention to the fact that most nations trust the depositories, but he does not. He has sent a message: “I am not convinced that Venezuela can get back its gold in the future. I am getting it now.”
Let’s call this what it is: the first stage of a run on the bank. The bank in question is the European gold bank. Only governments and central banks have deposits there. It is closed to the public. There is no gold standard any longer, but there are gold banks: depositories. Chavez is saying that he does not think there is enough gold in reserve to deliver on all the IOUs that the bank has issued.
I don’t blame him.