10 ms·

How to get $12 billion of gold to Venezuela

171 points by pathik 15y ago

usedtolurk 15y ago
Actually, the logistics (which the article focuses on) isn't as unique a problem as one might think. Australia alone produces about 300 tons of gold each year and I would expect most of it is exported.
- roel_v 15y ago
  But not in a single shipment. I don't know how much ships and airplanes leave Australia each day, but let's say it's 1000 (I guess the 2 or 3 main airports alone would do that, but let's say) and if each would take a kilo of gold with them, all produced gold can be send abroad. That's a very different situation from what Chavez apparently is trying to do.
  - TillE 15y ago
    I don't understand why this is such a big deal. The solution is right there in the article - send a few ships from the navy, like the Spanish treasure fleets of old. If England doesn't want armed Venezuelan ships in their waters, use a freighter and escort it all the way back. Divide up the cargo between the ships if you're really paranoid. The author is inventing a problem where none exists. Transporting large amounts of heavy cargo overseas is a solved problem.
    - marshray 15y ago
      Ordinarily, you'd want insurance on such a shipment. Even if you sent the navy, getting insurance for the transport between the bank vault and the armed ships could be an issue.
  - usedtolurk 15y ago
    Just saying that this is not a new problem and there are tested procedures for moving that sort of quantity of gold around the world. (The article seems to imply that a "new" solution was needed). For example, swapping physical metal in one location for physical metal in another location is common practice among banks and large investors. They could swap metal to various other locations around the world before shipping it back home bit by bit. The main reason large orders are split into smaller shipments is the risk (and insurance costs). The Venezuelan government may decide that it's navy can provide better insurance than a commercial insurer, in which case it might make sense to do it all in one shipment (which would be quite unusual).
zrgiu 15y ago
submarines are a lot harder to hijack ...
glymor 15y ago
He's moving the gold because: * He's worried that sanctions etc could freeze it * He want's to be able to sell it without being clear about it (so he can buy the next election or make a personal nest egg with it). Venezuela's bonds moved 50 basis points on this so the markets are obviously worried that the gold's going to start evaporating once it's under his control.
- rmoriz 15y ago
  Rumors are that Chavez wants to confiscate/socialize the venezuelan gold industry => http://blogs.ft.com/beyond-brics/2011/08/20/venezuelas-gold-reserves-no-place-to-hide-from-chavez/ http://blogs.ft.com/beyond-brics/2011/08/20/venezuelas-gold-... Foreign companies that would lose their mines would very likely try to get hands on the gold that's located outside of Venezuela (with a court order etc)...
  - pakitan 15y ago
    The correct term is nationalization. As far as I'm aware, there have been many nationalized foreign companies in Venezuela but the owners are getting paid. Given that I haven't heard anyone complaining, the prices are probably fair. So, this is very far from confiscation.
    - losvedir 15y ago
      That is so far from my general impression of the matter, I had to do some news searches to make sure I wasn't taking crazy pills. Fortunately, it seems I wasn't. "Companies are very afraid."[1] Here[2] we have a company whose oil rigs were "nationalized" because they refused to do more work until they were paid the $49 million it was owed. Another article [3] indicates that Exxon-Mobil and Conoco-Philips might get paid for their assets four years after nationalization. [1] http://www.washingtontimes.com/news/2009/may/12/nationalization-continuing/ http://www.washingtontimes.com/news/2009/may/12/nationalizat... [2] http://www.reuters.com/article/2010/06/24/us-venezuela-nationalizations-idUSTRE65N0UM20100624 http://www.reuters.com/article/2010/06/24/us-venezuela-natio... [3] http://www.stockmarketsreview.com/extras/venezuela_to_compensate_american_oil_companies_for_nationalization_20110805_159386/ http://www.stockmarketsreview.com/extras/venezuela_to_compen...
joelthelion 15y ago
Use bitcoins? :-p
- epscylonb 15y ago
  My first thought as well. Bitcoin is often said to have many of the properties of gold, not least its scarcity. But here is a clear example of how bitcoin trumps gold, people can move large amounts of bitcoin in a short amount of time with very little risk. Bitcoin users are already doing this. http://blockexplorer.com/block/0000000000022043f9ea2c298f3381c6ddd86b968271117dd55cb48ac297954c http://blockexplorer.com/block/0000000000022043f9ea2c298f338... Total BTC?: 416300.33 At todays bitcoin market value that is 4,605,201.67 USD. Still some way off 12 billion I grant you, but astonishing considering gold has been used as currency for thousands of years and bitcoin is less than 3 years old.
  - dualogy 15y ago
    Not so astonishing! Multiply those 3 years times 1000s and you get from 4m to 12bn. This would assume currency value stability over 1000s of years of course, not possible even over decades.
  - ceejayoz 15y ago
    > But here is a clear example of how bitcoin trumps gold, people can move large amounts of bitcoin in a short amount of time with very little risk. Bitcoin users are already doing this. I'd imagine that governments like the fact that moving their gold is hard, slow, and risky.
ars 15y ago
If ever there was a clear example of why gold makes a terrible monetary base this was it. And it seems to me that a lot of the reason for gold being worth a lot is countries just sitting on it. If they would sell it to people who would use it (for jewelry or active trading) the price would go down a lot. And what is the point of just having lots of gold and never using it? It's just a big pile of metal, if it wasn't there would anyone notice the difference? (i.e. could I borrow it, then return it 100 years later? Would anyone notice?)
- OstiaAntica 15y ago
  Actually, Chavez has already destroyed his fiat currency. What's a better alternative store of value than gold?
  - ars 15y ago
    Oil would work. It has a large and liquid market. And they have plenty of it.
    - adammichaelc 15y ago
      How would you store oil if you wanted to actually have possession of the asset? Barrels of oil in the basement seems pretty unreasonable.
      - ars 15y ago
        The same way you store gold: You pay someone to store it for you. It's bigger so it's harder to store, but it's also harder to steal, so it needs less guarding. I'm not suggesting it as currency, just if you need something to back your currency oil works a lot better than gold.
- 3pt14159 15y ago
  If everyone was using it for transactions there would be a much, much higher demand and you wouldn't need 40 planes worth for a similar amount of buying power. Ultimately, energy should be currency, not gold, but it is still better than fiat.
fabiandesimone 15y ago
As a Venezuelan, this is terrible news. Forget economic consequences for a minute. The corruption levels in Venezuela are incredibly high. Is widely known that the Chavez government has been one of the most corrupt government in Venezuela history. What do you think is going to happen to this gold when it gets to Venezuela? (If it ever gets there) I mean, I don't know the dynamics of this, but which authority is going to weigh the incoming gold? Who are we supposed to trust when every institution in the country is in Chavez hands? They basically say what they are told. Also, our Central Bank does not have the physical capacity to store that much gold. Chavez already offered the basement of the Presidential Palace :S (which I have been to and is as a regular basement can be). What about the cost of moving that quantity of gold? They are already talking about 40 trips. Yeah, that's going to cost, 400 million according to the article. Money that could be very well spent in say, hospitals: http://www.noticias24.com/actualidad/noticia/302153/en-fotos-asi-se-encuentra-la-infraestructura-del-hospital-vargas/ http://www.noticias24.com/actualidad/noticia/302153/en-fotos... ) As for the cash reserves: they are going to Russian and Chinese banks. Sorry to those that might be offended, but personally I have as much trust in these governments as I have in mine. We have an election in 2012. If Chavez looses (or if he evens runs... he might die from his cancer before that, dunno), that gold is going back. More gold will be lost along the way. What about the cash reserves? The new government will have to deal with Russians and Chinese institutions under a different premise, because the new government will be or will try to be very close with the US. I think we can expect things to get a bit rough and a lot of gold will go unaccounted for. Sad news for Venezuela, once again.
- sek 15y ago
  Good points. This could be a bad signal, gold is very handy when you need to get out of a country in political change. Didn't had the Wife of the Tunisian Dictator a ton of gold?
  - hugh3 15y ago
    In which case surely he'd keep it in Europe? Or is this Venezuela's gold rather than Chavez's personal gold? In any case, I'm sure that Chavez, like most dictators, has a crapload of money carefully squirreled away in foreign countries. Attempting to steal Venezuela's own gold and then sneak out with all he can carry doesn't sound useful.
sek 15y ago
You can't eat gold, all this rant on gold is so stupid, the monetary value is merely historical. In modern economy only counts the real application of resources and nothing else. Nobody will ever introduce a new Gold standard, a resource is a bad idea for a currency. What if someone finds a gigantic Deposit or a way to cheaply produce Gold? The additional value over the real industrial utilization is a bubble, nothing else.
- StrawberryFrog 15y ago
  > the monetary value is merely historical In theory, yes. However, the all-time high price that one can get for gold today is actual and current.
  - sek 15y ago
    A real currency is widely accepted, gold is not. Gold is very unhandy, the article is about one example why.
    - david927 15y ago
      Where is gold not accepted? In which country? It's not as handy but it is valuable because you can't make more of it.
      - StrawberryFrog 15y ago
        Gold is not accepted at my local supermarket, and probably not yours either. They take cash or card, but not gold. You have to convert it into currency first. You can do this in any country if you know where to go, but you get the point - it's not as handy as paper money. Suppose you have a 1 ounce gold coin (worth USD 1882 today) and you owe your friend $100. You have the money, but how do you pay him? Do you file bits off the coin, or do you ask for change from $1882 ?
        _delirium 15y ago
        It'd actually be an interesting experiment to see what you could buy with smaller-denomination gold coins. I would bet some number of independent businessmen (but not large chain stores) would be willing to accept, say, the 1/10-oz American Gold Eagle as equivalent to around $180.
chollida1 15y ago
> It would take a little while, but eventually the gold would start trickling in: if you’re willing to pay a constant premium of 2% over the market price for a good, you can be sure that the good in question will ultimately find its way to your door I'm not sure about the authors qualifications but why would I ever risk bringing a bar of gold to a Venezualan bank to earn 2% on my money? I can get better rates in the bond market with much less risk. Now if your willing to pay a 50% premium the I can see something working here
- roel_v 15y ago
  You get 2% per year on the bond market, but you get 2% instantly when exchanging in the proposed fashion. If you could traffic enough gold, let's say because you are a pilot and fly in and out of Venezuela 5 times per week, you can make a bundle on a deal like this. (make a quick excel sheet - you can double your money in 6 weeks when you can make an exchange like this 5 times a week! Beat that with bonds!)
  - chollida1 15y ago
    Sure, but you're discarding all the other costs associated with bringing in gold, plane, fuel, security. These will eat up all of your profit. As the article stated, 500 million for insurance on 12 billion in gold is allready over the 2% your going to earn. And that's before you factor in any security, borrowing/carrying costs, transportation. I have done the numbers and you end up in the red on each and every transaction you do:(
    - roel_v 15y ago
      That's not the point, you said 'I can get 2% on bonds' which is a completely nonsense comparison, that's what I was saying. You confused a 2% per year yield with a 2% per transaction yield. And the hypothetical pilot that I used as an example doesn't have to pay any costs - he just puts a gold bar in his suitcase. With gold prices of 33k€ per kilo, he can (hypothetically) put a kilo in his luggage and make 660€ on each transaction, or start with whatever initial amount he can scrape together and double his money in 7 weeks. (yes there are probably regulations on what pilots can do when on duty, and customs regulations etc, my point is that there are many people who can externalize the costs you mention and they can make a handsome profit. If I'm a sailor on a cargo ship, it would be easy to take 10 kg of gold and make 6600 euros on a shipment. Split that half way with whoever bankrolls it, and it's still a great ROI).
cpeterso 15y ago
Facing a similar problem, the Pentagon used 21 C-130 Hercules cargo planes to haul $12B to Iraq. Admittedly, the Pentagon only had to ship pallets of $100 bills, not gold bars. Surprisingly, federal auditors are now suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error. U.S. officials claim often didn't have time or staff to keep strict financial controls, so millions of dollars were stuffed in gunnysacks and hauled on pickups to Iraqi agencies or contractors. http://articles.latimes.com/2011/jun/13/world/la-fg-missing-billions-20110613 http://articles.latimes.com/2011/jun/13/world/la-fg-missing-...
kragen 15y ago
Charles de Gaulle did something similar in 1965, but he was importing gold from the US, not from England. Argentina had a similar problem in 1946: its central bank "reserves" were actually held in trust by the Bank of England, in large part as a result of Argentina feeding England through the war, and England (as I understand it) couldn't come up with the cash. The eventual solution was to exchange the reserves for the British-owned railways of Argentina, which unfortunately couldn't be exported in trade to import the things Argentina needed. I could be naïve, but I think keeping your central bank's reserves overseas in a possibly hostile country is a dumb idea. Chávez doesn't seem to have done a very good job at New-Dealing his country, but he does get some things right.

171 points by pathik 15y ago

Actually, the logistics (which the article focuses on) isn't as unique a problem as one might think. Australia alone produces about 300 tons of gold each year and I would expect most of it is exported.

roel_v 15y ago
But not in a single shipment. I don't know how much ships and airplanes leave Australia each day, but let's say it's 1000 (I guess the 2 or 3 main airports alone would do that, but let's say) and if each would take a kilo of gold with them, all produced gold can be send abroad. That's a very different situation from what Chavez apparently is trying to do.
- TillE 15y ago
  I don't understand why this is such a big deal. The solution is right there in the article - send a few ships from the navy, like the Spanish treasure fleets of old. If England doesn't want armed Venezuelan ships in their waters, use a freighter and escort it all the way back. Divide up the cargo between the ships if you're really paranoid. The author is inventing a problem where none exists. Transporting large amounts of heavy cargo overseas is a solved problem.
  - marshray 15y ago
    Ordinarily, you'd want insurance on such a shipment. Even if you sent the navy, getting insurance for the transport between the bank vault and the armed ships could be an issue.
- usedtolurk 15y ago
  Just saying that this is not a new problem and there are tested procedures for moving that sort of quantity of gold around the world. (The article seems to imply that a "new" solution was needed). For example, swapping physical metal in one location for physical metal in another location is common practice among banks and large investors. They could swap metal to various other locations around the world before shipping it back home bit by bit. The main reason large orders are split into smaller shipments is the risk (and insurance costs). The Venezuelan government may decide that it's navy can provide better insurance than a commercial insurer, in which case it might make sense to do it all in one shipment (which would be quite unusual).

zrgiu 15y ago

submarines are a lot harder to hijack ...

glymor 15y ago

He's moving the gold because: * He's worried that sanctions etc could freeze it * He want's to be able to sell it without being clear about it (so he can buy the next election or make a personal nest egg with it). Venezuela's bonds moved 50 basis points on this so the markets are obviously worried that the gold's going to start evaporating once it's under his control.

rmoriz 15y ago
Rumors are that Chavez wants to confiscate/socialize the venezuelan gold industry => http://blogs.ft.com/beyond-brics/2011/08/20/venezuelas-gold-reserves-no-place-to-hide-from-chavez/ http://blogs.ft.com/beyond-brics/2011/08/20/venezuelas-gold-... Foreign companies that would lose their mines would very likely try to get hands on the gold that's located outside of Venezuela (with a court order etc)...
- pakitan 15y ago
  The correct term is nationalization. As far as I'm aware, there have been many nationalized foreign companies in Venezuela but the owners are getting paid. Given that I haven't heard anyone complaining, the prices are probably fair. So, this is very far from confiscation.
  - losvedir 15y ago
    That is so far from my general impression of the matter, I had to do some news searches to make sure I wasn't taking crazy pills. Fortunately, it seems I wasn't. "Companies are very afraid."[1] Here[2] we have a company whose oil rigs were "nationalized" because they refused to do more work until they were paid the $49 million it was owed. Another article [3] indicates that Exxon-Mobil and Conoco-Philips might get paid for their assets four years after nationalization. [1] http://www.washingtontimes.com/news/2009/may/12/nationalization-continuing/ http://www.washingtontimes.com/news/2009/may/12/nationalizat... [2] http://www.reuters.com/article/2010/06/24/us-venezuela-nationalizations-idUSTRE65N0UM20100624 http://www.reuters.com/article/2010/06/24/us-venezuela-natio... [3] http://www.stockmarketsreview.com/extras/venezuela_to_compensate_american_oil_companies_for_nationalization_20110805_159386/ http://www.stockmarketsreview.com/extras/venezuela_to_compen...

joelthelion 15y ago

Use bitcoins? :-p

epscylonb 15y ago
My first thought as well. Bitcoin is often said to have many of the properties of gold, not least its scarcity. But here is a clear example of how bitcoin trumps gold, people can move large amounts of bitcoin in a short amount of time with very little risk. Bitcoin users are already doing this. http://blockexplorer.com/block/0000000000022043f9ea2c298f3381c6ddd86b968271117dd55cb48ac297954c http://blockexplorer.com/block/0000000000022043f9ea2c298f338... Total BTC?: 416300.33 At todays bitcoin market value that is 4,605,201.67 USD. Still some way off 12 billion I grant you, but astonishing considering gold has been used as currency for thousands of years and bitcoin is less than 3 years old.
- dualogy 15y ago
  Not so astonishing! Multiply those 3 years times 1000s and you get from 4m to 12bn. This would assume currency value stability over 1000s of years of course, not possible even over decades.
- ceejayoz 15y ago
  > But here is a clear example of how bitcoin trumps gold, people can move large amounts of bitcoin in a short amount of time with very little risk. Bitcoin users are already doing this. I'd imagine that governments like the fact that moving their gold is hard, slow, and risky.

ars 15y ago

If ever there was a clear example of why gold makes a terrible monetary base this was it. And it seems to me that a lot of the reason for gold being worth a lot is countries just sitting on it. If they would sell it to people who would use it (for jewelry or active trading) the price would go down a lot. And what is the point of just having lots of gold and never using it? It's just a big pile of metal, if it wasn't there would anyone notice the difference? (i.e. could I borrow it, then return it 100 years later? Would anyone notice?)

OstiaAntica 15y ago
Actually, Chavez has already destroyed his fiat currency. What's a better alternative store of value than gold?
- ars 15y ago
  Oil would work. It has a large and liquid market. And they have plenty of it.
  - adammichaelc 15y ago
    How would you store oil if you wanted to actually have possession of the asset? Barrels of oil in the basement seems pretty unreasonable.
    - ars 15y ago
      The same way you store gold: You pay someone to store it for you. It's bigger so it's harder to store, but it's also harder to steal, so it needs less guarding. I'm not suggesting it as currency, just if you need something to back your currency oil works a lot better than gold.
3pt14159 15y ago
If everyone was using it for transactions there would be a much, much higher demand and you wouldn't need 40 planes worth for a similar amount of buying power. Ultimately, energy should be currency, not gold, but it is still better than fiat.

fabiandesimone 15y ago

As a Venezuelan, this is terrible news. Forget economic consequences for a minute. The corruption levels in Venezuela are incredibly high. Is widely known that the Chavez government has been one of the most corrupt government in Venezuela history. What do you think is going to happen to this gold when it gets to Venezuela? (If it ever gets there) I mean, I don't know the dynamics of this, but which authority is going to weigh the incoming gold? Who are we supposed to trust when every institution in the country is in Chavez hands? They basically say what they are told. Also, our Central Bank does not have the physical capacity to store that much gold. Chavez already offered the basement of the Presidential Palace :S (which I have been to and is as a regular basement can be). What about the cost of moving that quantity of gold? They are already talking about 40 trips. Yeah, that's going to cost, 400 million according to the article. Money that could be very well spent in say, hospitals: http://www.noticias24.com/actualidad/noticia/302153/en-fotos-asi-se-encuentra-la-infraestructura-del-hospital-vargas/ http://www.noticias24.com/actualidad/noticia/302153/en-fotos... ) As for the cash reserves: they are going to Russian and Chinese banks. Sorry to those that might be offended, but personally I have as much trust in these governments as I have in mine. We have an election in 2012. If Chavez looses (or if he evens runs... he might die from his cancer before that, dunno), that gold is going back. More gold will be lost along the way. What about the cash reserves? The new government will have to deal with Russians and Chinese institutions under a different premise, because the new government will be or will try to be very close with the US. I think we can expect things to get a bit rough and a lot of gold will go unaccounted for. Sad news for Venezuela, once again.

sek 15y ago
Good points. This could be a bad signal, gold is very handy when you need to get out of a country in political change. Didn't had the Wife of the Tunisian Dictator a ton of gold?
- hugh3 15y ago
  In which case surely he'd keep it in Europe? Or is this Venezuela's gold rather than Chavez's personal gold? In any case, I'm sure that Chavez, like most dictators, has a crapload of money carefully squirreled away in foreign countries. Attempting to steal Venezuela's own gold and then sneak out with all he can carry doesn't sound useful.

sek 15y ago

You can't eat gold, all this rant on gold is so stupid, the monetary value is merely historical. In modern economy only counts the real application of resources and nothing else. Nobody will ever introduce a new Gold standard, a resource is a bad idea for a currency. What if someone finds a gigantic Deposit or a way to cheaply produce Gold? The additional value over the real industrial utilization is a bubble, nothing else.

StrawberryFrog 15y ago
> the monetary value is merely historical In theory, yes. However, the all-time high price that one can get for gold today is actual and current.
- sek 15y ago
  A real currency is widely accepted, gold is not. Gold is very unhandy, the article is about one example why.
  - david927 15y ago
    Where is gold not accepted? In which country? It's not as handy but it is valuable because you can't make more of it.
    - StrawberryFrog 15y ago
      Gold is not accepted at my local supermarket, and probably not yours either. They take cash or card, but not gold. You have to convert it into currency first. You can do this in any country if you know where to go, but you get the point - it's not as handy as paper money. Suppose you have a 1 ounce gold coin (worth USD 1882 today) and you owe your friend $100. You have the money, but how do you pay him? Do you file bits off the coin, or do you ask for change from $1882 ?
      - _delirium 15y ago
        It'd actually be an interesting experiment to see what you could buy with smaller-denomination gold coins. I would bet some number of independent businessmen (but not large chain stores) would be willing to accept, say, the 1/10-oz American Gold Eagle as equivalent to around $180.

chollida1 15y ago

> It would take a little while, but eventually the gold would start trickling in: if you’re willing to pay a constant premium of 2% over the market price for a good, you can be sure that the good in question will ultimately find its way to your door I'm not sure about the authors qualifications but why would I ever risk bringing a bar of gold to a Venezualan bank to earn 2% on my money? I can get better rates in the bond market with much less risk. Now if your willing to pay a 50% premium the I can see something working here

roel_v 15y ago
You get 2% per year on the bond market, but you get 2% instantly when exchanging in the proposed fashion. If you could traffic enough gold, let's say because you are a pilot and fly in and out of Venezuela 5 times per week, you can make a bundle on a deal like this. (make a quick excel sheet - you can double your money in 6 weeks when you can make an exchange like this 5 times a week! Beat that with bonds!)
- chollida1 15y ago
  Sure, but you're discarding all the other costs associated with bringing in gold, plane, fuel, security. These will eat up all of your profit. As the article stated, 500 million for insurance on 12 billion in gold is allready over the 2% your going to earn. And that's before you factor in any security, borrowing/carrying costs, transportation. I have done the numbers and you end up in the red on each and every transaction you do:(
  - roel_v 15y ago
    That's not the point, you said 'I can get 2% on bonds' which is a completely nonsense comparison, that's what I was saying. You confused a 2% per year yield with a 2% per transaction yield. And the hypothetical pilot that I used as an example doesn't have to pay any costs - he just puts a gold bar in his suitcase. With gold prices of 33k€ per kilo, he can (hypothetically) put a kilo in his luggage and make 660€ on each transaction, or start with whatever initial amount he can scrape together and double his money in 7 weeks. (yes there are probably regulations on what pilots can do when on duty, and customs regulations etc, my point is that there are many people who can externalize the costs you mention and they can make a handsome profit. If I'm a sailor on a cargo ship, it would be easy to take 10 kg of gold and make 6600 euros on a shipment. Split that half way with whoever bankrolls it, and it's still a great ROI).

cpeterso 15y ago

Facing a similar problem, the Pentagon used 21 C-130 Hercules cargo planes to haul $12B to Iraq. Admittedly, the Pentagon only had to ship pallets of $100 bills, not gold bars. Surprisingly, federal auditors are now suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error. U.S. officials claim often didn't have time or staff to keep strict financial controls, so millions of dollars were stuffed in gunnysacks and hauled on pickups to Iraqi agencies or contractors. http://articles.latimes.com/2011/jun/13/world/la-fg-missing-billions-20110613 http://articles.latimes.com/2011/jun/13/world/la-fg-missing-...

kragen 15y ago

Charles de Gaulle did something similar in 1965, but he was importing gold from the US, not from England. Argentina had a similar problem in 1946: its central bank "reserves" were actually held in trust by the Bank of England, in large part as a result of Argentina feeding England through the war, and England (as I understand it) couldn't come up with the cash. The eventual solution was to exchange the reserves for the British-owned railways of Argentina, which unfortunately couldn't be exported in trade to import the things Argentina needed. I could be naïve, but I think keeping your central bank's reserves overseas in a possibly hostile country is a dumb idea. Chávez doesn't seem to have done a very good job at New-Dealing his country, but he does get some things right.