DOW JONES NEWSWIRES

CARACAS (Dow Jones)--Venezuela has begun the process of withdrawing the 99 tons of gold that it holds in the Bank of England, part of the South American country's plan to repatriate its reserves held overseas and transfer funds to allied countries, Central Bank President Nelson Merentes confirmed in a statement.

"We have already established communication with the Bank of England and have initiated the corresponding protocols to complete this operation," Merentes said in a press release. Once the process has been completed, officials will begin shipping the gold back to the central bank vaults in Caracas.

Government officials said last week that they were looking to bring back home $11 billion in gold from debt-laden countries such as the U.S. and in Europe and are looking to increase allocations to allied countries such as Brazil, China and Russia, whose economies are also growing faster. Venezuelan Finance Minister Jorge Giordani said the move was designed to diversify the country's portfolio.

"There is a great crisis that can trigger a domino effect that would put those assets at risk. It's preferable to avoid that risk and bring the gold to the country, Merentes said, referring to the debt problems plaguing developed economies.

Analysts criticized the move, saying it would further decrease transparency and raise the country's risk profile, while some speculated that the plan is more of a political maneuver than an economic one. Venezuela has around $29 billion in foreign reserves, of which $18 billion is held in gold. Nearly $11 billion of the gold reserves are currently held in banks in developed economies such as the U.S. and Europe.

In the statement, Merentes assured that Venezuela has full capability of safely transferring and holding the funds, "meeting international standards."

He said the gold will be held in the same vaults where it had always been placed before it was shipped overseas between 1986 and 1992.

--By Kejal Vyas, Dow Jones Newswires; 58-414-249-6821;

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Submitted by cpowell on 05:47AM ET Monday, August 22, 2011. Section:

8:46p ET Monday, August 22, 2011
Dear Friend of GATA and Gold:

Mineweb's Lawrence Williams today comments on how Venezuela's attempt to repatriate its gold may test GATA's view of the gold market. Williams' commentary is headlined "Chavez Move Could Drive Gold through the Roof -- and Put Confiscation on the Cards Again" and you can find it at Mineweb here: