Venezuela nationalizes its gold industry

Venezuela's President Hugo Chavez delivers a speech at the Venezuelan National Assembly, in Caracas.

Steve Chiotakis: Gold has reached another record high of more than $1,860 an ounce. And the Venezuelan President Hugo Chavez apparently sees the value, and is nationalizing the country's gold sector. That means gold will now be used to bolster the Venezuela's bank accounts.

The BBC's Sarah Grainger has been covering this from Caracas, she's with us now. Hello, Sarah.

Sarah Grainger: Hi, good morning.

Chiotakis: How does a country go about nationalizing gold?

Grainger: Well, for Venezuela this isn't something that's particularly new, because the president has nationalized various different sectors of the economy. He'll issue the decree in the next few days, and it will cover both the extraction and the processing of gold. So the government's saying basically they're taking over the entire process. That will mean taking some elements of that process out of the hands of private companies. The government's saying that it will be keeping all the profits within the government, within the country, and that's why they're taking this measure - to stop foreign companies taking profits from the gold sector outside of Venezuela.

Chiotakis: How much, Sarah, does this have to do with the record high price of gold right now?

Grainger: President Chavez says that this is a major factor in his decision, that gold prices are so high, that the country really has to benefit from them. And that, for too long, private companies have been taken out the profits, and that the country really needs to keep the gold for itself. So that also could have some effect on the markets, and on confidence in Venezuela as well.

Chiotakis: The BBC's Sarah Grainger in Caracas. Sarah, thank you.

Grainger: That's a pleasure.

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