Thursday, May 21, 2009

The ruling by Venezuela's central bank that at least 70% of the gold extracted from the country's mines must be sold within the country is poorly formulated and subject to many interpretations, a sector executive told BNamericas.

"The decision is very unclear. It does not specify what will happen if the central bank does not want to buy the gold nor does it say at what price the gold should be sold," the source said under the condition of anonymity.

The executive interpreted the decision to mean that producers can sell their products at prices that any gold marketer in Venezuela would buy, and if the central bank does not want to buy it then the producer can offer it to a third-party.

The source added that if the central bank wants to get its hands on more gold, this is not the way to go about doing it.

"There are ways to fix this that I hope will be applied and with any luck the parties involved will not act radically because if they do, then the gold industry in Venezuela will be done with," the source asserted.

THE REGULATIONS

The bank's ruling states that anyone who produces gold or its allows in any form must sell 70% of its total output within the country. Of this amount, 60% must go to the central bank and the remainder can be sold to domestic buyers.

"These percentages will be calculated using the weight in kilograms of refined or smelted gold produced following the existing guidelines for the production of the material," the document states.

The document also says that should a producer not export any of its product or its exportation is denied, then said percentage should be offered for sale to the central bank along with the rest.

Source: BNAmericas