Chavez climbs on bullion bandwagon – nationalizes Venezuelan gold industry

Venezuelan President Hugo Chavez (pictured) said on Wednesday he will nationalize the gold industry, from mining through to processing, and move bullion reserves held in Europe to Venezuela’s central bank.

Toronto-listed Rusoro is the only large gold miner operating in Venezuela and the country does not feature in the top 20 global gold producing states.

By the close Rusoro had lost 16.7% with 591,000 share changing hands, more than double average daily volumes. Rusoro holds a 50% interest in the Isidora gold mine that produced some 110,000 ounces last year. The Chavez government holds the rest.

Reuters reports the move follows a dispute between his government and foreign miners who say the rules limiting the amount of gold that can be exported from the South American nation hurt their efforts to secure financing and create jobs.

The Wall Street Journal blog MarketBeat said gold prices barely blinked after Chavex announced the plans to nationalize gold mines and quotes one broker as saying: “If they nationalize the industry, we’ll see less supply. It’s a positive, but not a massive positive because they’re not a huge producer.”

Daily Journal reports Venezuela central bank president Nelson Merentes said on television that the decision to move the $11 billion worth of gold held by banks in England, the US, Canada and France was being taken out of “prudence” because of worries about the economies of these countries.

According to a survey released last week by consultants Ernst & Young, resource nationalism jumped to the top of the list of concerns at the world’s top miners after 25 countries announced their intentions to increase their take of the mining industry’s profits and others contemplate outright nationalization.

Mark III Photonics / Photo of Chavez during a state visit to Ukraine on October 18, 2010 in Kiev by Mark III Photonics / Shutterstock.com