Venezuelan President Hugo Chávez announced plans to nationalize the country's gold mining industry and withdraw $11B in gold reserves from U.S. and European banks.

Chávez said the recall is intended to help protect the oil-producing country from the economic woes in the United States and Europe.

"We're going to start to bring back our gold to the Central Bank," Chávez said in a telephone call broadcast live on state television.

It wasn't clear how soon the overseas gold reserves are to be brought to Venezuela.

The Central Bank said recently that the country has about $17.9 billion in gold out of a total of more than $28.6 billion in international reserves. Chávez said $11 billion worth of the gold is held in other countries.

Central Bank president Nelson Merentes said on television that the decision to move the gold reserves was being taken out of "prudence."

"At the time of these disturbances, it's preferable to recover our assets, in this case the gold, and have it here in the vaults," Merentes said.

Venezuela has nearly $4.6 billion of its gold reserves in the Bank of England, according to a report by Finance Minister Jorge Giordani that was leaked to the news media Tuesday by an opposition lawmaker.

The report said additional Venezuelan gold reserves are held by the U.S. bank J.P. Morgan Chase, British banks Barclays, HSBC and Standard Chartered, France's BNP Paribas and Canada's Bank of Nova Scotia.

As for Venezuela's other non-gold international reserves, officials are seeking "more diversification in countries that have more solid economies," Merentes said. He mentioned China, saying it has a "shield of protection" against a potential deepening of the international economic crisis.

Chávez has raised the idea of withdrawing Venezuela's reserves from U.S. banks repeatedly in the past. At a summit in 2008, he urged his Latin American allies to begin pulling their reserves out of U.S. banks, warning of a looming economic crisis in the United States.

Giordani and Merentes, who appeared together on television Wednesday, said they proposed to Chávez that Venezuela's nearly $6.3 billion in non-gold international reserves such as bank deposits and bonds should be reviewed and transferred from U.S. and European banks to countries they consider safer, including China, Russia and Brazil, among other countries in Asia and Latin America.

Chávez also said he would soon issue a decree for the nationalization of the gold mining industry so that the government can increase control over the gold produced.

"We're going to nationalize gold and we're going to convert it, among other things, into international reserves," he said.

The Russian company Rusoro Mining Ltd. controls one of Venezuela's most important gold mines in the country's southeast. In February, the government canceled the gold mining concession of a Canadian company, Crystallex International Corp.

It's unclear how Chávez's new decree differs from a 1965 law that nationalized gold mining in Venezuela. In 1977, the government granted itself exclusive rights for extracting gold.

Chávez said the decree will allow the government to "begin to take over the gold zone," where authorities have periodically carried out operations to evict wildcat miners from illegal mines.

The president said the government aims to fight "mafias" that have been taking some of the country's gold.

 

Based on reporting by The Associated Press.

 

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