Furor Over Venezuela’s Gold Sales Demonstrates That Gold Is Still MoneyRon Paul
While much of the attention over the attempt to force Venezuelan President Nicolas Maduro out of office has focused on Venezuela’s vast oil reserves, less attention has been paid to Maduro’s attempts to sell off Venezuela’s gold. Just over two years into a hyperinflationary crisis created by Maduro’s unlimited printing of money, Maduro is desperate for any cash he can get his hands on.
That’s why he’s resorted to trying to repatriate Venezuelan gold at the Bank of England and sell other portions of Venezuela’s gold reserves to try to keep his government afloat. Yet his moves to do so have been opposed by the United States and its allies. It’s ironic that those who decry gold as an outdated relic of days gone by suddenly get so defensive when another country tries to access its golden wealth.
Yet behind that irony lies an important truth: gold is still money. It is the ultimate source of value when paper money systems break down and become worthless, which is why nations and central banks take such care to store it. Even the UK, which sold more than half its remaining gold reserves from 1999 onwards, still maintains a reserve of gold.
Furthermore, the United States government understands that gold is still money, which is why it put pressure on the Bank of England not to allow Maduro to repatriate the Venezuelan gold remaining in London. That’s also why the US is using the threat of sanctions to keep potential gold buyers from shipping out the gold Maduro already has for sale in Venezuela, gold that was repatriated from the New York Fed by President Chavez.
So if governments and central banks understand underneath all their rhetoric to the contrary that gold is money, why do so many investors make the mistake of not investing in gold? Gold has always served as the ultimate store of wealth, and those who have held gold have benefited greatly from its protection through times of financial crisis and economic turmoil.
Special: IRA, 401(k) & TSP Scam
Investors who understood the importance of gold in protecting assets during the last financial crisis made out very well. They saw their gold holdings gain 25% in value while stocks lost more than half their value. Those who only saw that importance in hindsight can learn that lesson and rectify their mistakes before the next financial crisis occurs.