Bolivia Moves Closer To Gold Confiscation With Latest Law Blocking Bullion Sales/Exports
What is Bolivia worried about?
Perhaps the 25,000% hyperinflationary evaporation of the peso in the ’80s has left a deep scarring on the South American countries lawmakers.
In 2018, The Bolivian Central Bank (BCB) took the administrative measure to suspend the sale of dollars in order to maintain its peg to the dollar.
And in doing so, the BCB has been forced to puke away its reserves (now at their lowest level) since 2007.
All of which is why, as Bloomberg reports, Bolivian lawmakers are debating a bill that would require all gold produced in the country to be offered to the central bank as the nation builds its reserves.
In addition, the law is an effort to crackdown on the illegal bullion trade.
Local producers would need certification to sell abroad, and would first be required to offer their gold to the central bank at international prices in return for tax breaks, according to a copy of the draft bill.
Exports would be permitted once the bank meets its annual buying limits.
Bolivia currently has about $2.6 billion in gold reserves, making it the fourth-largest holder of bullion among South American nations.
The bill will allow a greater portion of reserves to be held in the precious metal at a time when global stimulus measures stoke inflation concerns that undermine fiat currencies.
As one emerging markets veteran noted: “It is not a far reach from this point to confiscation of an FDR-esque national confiscation of Bolivian’s gold savings.”
Maybe the bitcoinization of El Salvador’s economy will provide the confidence for local Bolivians to transfer their wealth into the crypto space?
Fri, 06/25/2021 – 05:45