The Trump administration has opened the door for Venezuela to sell gold into the US in a major boost to a country facing crippling dollar shortages due to restrictions on oil exports.
The Treasury’s Office of Foreign Assets Control issued a license allowing US entities to undertake certain transactions involving Venezuelan-origin gold that would otherwise be prohibited under sanctions, according to a Friday notice. The authorization comes with several safeguards such as contracts governed by US law and payments being placed in US-controlled accounts.
The license doesn’t cover debt swaps or digital payments; transactions involving Russia, Iran, North Korea, Cuba, or China-linked entities; or mining or producing gold inside Venezuela.
The announcement comes after Interior Secretary Doug Burgum’s visit this week to Caracas as the US seeks to revive oil and mineral production in the South American nation, stepping up coordination with Venezuela’s interim government in the wake of the January capture of former President Nicolas Maduro. The US and Venezuela have agreed to re-establish diplomatic relations, seven years after the US suspended operations at its embassy in Caracas.
The US administration has already struck a deal that would see Venezuela’s state mining company sell as much as 1,000 kilograms of gold to commodities trader Trafigura, according to people familiar with the matter.
Over the years, Maduro resorted to selling tons of gold to illegal international buyers from the vaults of Venezuela’s central bank to help the country’s scant finances. The sales impacting the nation’s gold reserves came as oil production plummeted on years of mismanagement and graft, and lately US sanctions.
Bullion gained even more importance as a source of hard currency for Venezuela last year as the haven asset hit repeated record highs and the US government ratcheted up restrictions on its oil exports. The nation’s central bank sold nearly six tons of bullion in the second half, mainly in December when the US began seizing its oil tankers.
Venezuelan gold was mined in a hub envisioned by late Hugo Chávez, Arco Minero, located in the south of the country, approximately the size of Portugal. Over the years it has become a den for illegal mining activities and environmental degradation. The absence of state authority has given rise to criminal syndicates an armed groups, even though the military have been deployed in the area.
(By Jennifer A. Dlouhy and James Attwood)