Reuters reported on Monday that Venezuelan authorities have approached the Bank of England in an attempt to get back about 14 tonnes of gold bullion now held in the bank's vaults.
Last Thursday, US President Donald Trump imposed new sanctions against Venezuela, prohibiting US companies and individuals from buying the Latin American country's gold, prompting Venezuelan President Nicolas Maduro to accuse Trump of "schizophrenia" and to vow that Caracas would not "kneel down before American imperialism".
According to one of the sources, the Bank of England has expressed an interest in what exactly Venezuela plans to do with the gold.
The Bank of England declined to comment to Business Insider. Their offical source only clarified that plans to move the gold had been held up for almost 2 months because of insurance difficulties.More news: Shiny Cubone and Shiny Ponyta are Coming to Pokemon Go
"They are still trying to find insurance coverage, because the costs are high", the official said.
The South American country is now dealing with one of the worst economic crises in history, going through a fifth year of recession and an annual inflation of more than 400,000 percent. As a result, the country's gold reserves have been significantly depleted.
The government has promised to auction 2 billion euros in foreign exchange over an unspecified time frame, without saying where it plans to obtain those funds.
The Venezuelan government is looking to repatriate 14 tons worth of gold bars worth about $550 million from the Bank of England out of fear that the holdings may be affected by USA sanctions, Reuters reports, citing two sources said to have direct knowledge of the situation.More news: Calls To Recognise War Veterans On All Forms Of Transport In Australia
But even if Venezuela manages to repatriate the gold, the new US sanctions could make selling it to raise hard currency difficult.
As a reference, in the first nine months of 2018, Venezuela sold 23.62 tonnes of gold to Turkey for about $900 million.
While it might seem odd for one country's gold to be held elsewhere, apparently it's quite common for governments from "emerging-market" countries to store their gold in the banks of countries with a more developed economy. In 2011, Venezuelan socialist leader Hugo Chavez repatriated almost 160 tons of gold from the USA and some European countries.
But some of Venezuela's gold remained in the Bank of England. According to the latest data from the country's central bank, gold holdings have dropped to 160 tons in June from 364 tons in 2014.More news: Red Sox left insane tip after World Series celebration in LA
In 2017, such swap agreements became hard due to US sanctions, which blocked USA financial institutions from bankrolling any new financing operations.