News from Venezuela has Chavez nationalizing the gold industry and calling in its gold reserves stored in foreign banks. It may be that the nationalization fear is overblown, but bringing Venezuela's gold back into the country may be a shrewd move, particularly in light of recent statements that the US could sieze the gold reserves of other countries which are stored in New York. Possession, in this case, is ten tenths of the law.
Of course they will be reimbursed for it. The money is probably being printed right now.
Gold and oil operations have been nationalized before. It is a significant, albeit understated risk facing investors in mining companies. When gold prices languish, governments care not for the yellow metal; but a rapidly rising price makes gold a strategic metal.
Ghana once nationalized its mining industry; resulting in a dramatic reduction to annual production. After speaking with government officials in Ghana over the past few years, I am confident there will be no nationalization there as they seem to still understand that siezing the mines is killing the golden goose. But I can't say the same about other governments, especially in developing countries.
Ghanaian officials are worried about the growing scale of artisanal mining, and the friction between illegal miners, landowners, and legitimate mining companies. The rise in gold prices is changing the economics of small villages, where many have been lured away from family farming or fishing interests by the high price of gold. Apparently, it is illegal artisanal mining behind Chavez' move as well.
Of course they will be reimbursed for it. The money is probably being printed right now.
Gold and oil operations have been nationalized before. It is a significant, albeit understated risk facing investors in mining companies. When gold prices languish, governments care not for the yellow metal; but a rapidly rising price makes gold a strategic metal.
Ghana once nationalized its mining industry; resulting in a dramatic reduction to annual production. After speaking with government officials in Ghana over the past few years, I am confident there will be no nationalization there as they seem to still understand that siezing the mines is killing the golden goose. But I can't say the same about other governments, especially in developing countries.
Ghanaian officials are worried about the growing scale of artisanal mining, and the friction between illegal miners, landowners, and legitimate mining companies. The rise in gold prices is changing the economics of small villages, where many have been lured away from family farming or fishing interests by the high price of gold. Apparently, it is illegal artisanal mining behind Chavez' move as well.
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