Venezuela begins selling gold-backed certificates

Starting in September, Venezuela will begin selling certificates backed by gold bars. In this way, President Nicolas Maduro wants to provide his citizens with the opportunity not only to save safely, but also to buy on credit. Behind the official declarations, record inflation is raging...

During a television appearance, Maduro announced that the government's new program would be aimed primarily at pensioners and others who want to secure a peaceful future for themselves. In addition, the certificates will serve as collateral for a line of credit for the purchase of a car or other high-value goods.

When writing about Venezuela, however, it is necessary to mention a more serious problem, which, although it was not the main topic of conversation with Maduro, was certainly taken into account when designing the program. This is, of course, hyperinflation, which has been destroying the local economy for several years. Its current level is estimated at 100,000%. This means that the Venezuelan currency has almost no value anymore. As an example, the price of a cup of coffee in July was 200,000 bolivars.

In order to enable any transactions to take place, Maduro devalued the currency by 95% in August, introduced new bolivars with five zeros removed, and raised the minimum wage by 3,000%. However, these measures only scratch the surface, and Western media have already announced the collapse of the Venezuelan currency.

It is easy to guess that the currency crisis has affected ordinary citizens the most. The media are circulating statistics according to which as many as 90% of citizens live in poverty, and most of those surveyed have lost about 10 kg of body weight over the past year. In this situation, it is difficult to believe that decent pensions or easily accessible loans are currently among the government's priorities.

It can be assumed that in the face of the almost complete loss of value of money, gold is seen as a last resort for Venezuelans who want to maintain the purchasing power of their capital.

The government's austerity program will be covered by bars weighing 1.5 or 2.5 grams. The certificates are to be sold for approximately 3,500 or 5,800 bolivars, respectively.

Based on: "Venezuela to Sell Gold Bars to Pensioners as Inflation Soars," www.Bloomberg.com