Cute yarn!
Hugo Chavez wants to remove 99 tons of Venezuelan gold from London bank vaults. That could touch off a “short squeeze” of epic proportions.Daniel Drew, born July 29, 1797, was a powerful financier of the gilded age.
As a speculator, one of Drew's favorite sayings related to short selling: "He who sells what isn't his'n / Must buy it back or go to prison."
Cornelius Vanderbilt, the railroad baron, taunted Daniel Drew with this very saying as he squeezed Drew mercilessly. Drew was short a railroad stock, the New York and Harlem Railroad, when Vanderbilt and his associates bought up all available shares to drive the price up.
The share price more than tripled in just five months, as shorts were forced to buy back at any price. It cost Daniel Drew $500,000 -- a considerable sum in 1864! (Drew later lost millions more, but that's another story.)
In recent days, short sellers in the gold market may have felt a bit like Daniel Drew. Even as prices have gotten wilder and woolier -- gold threatening to go straight up -- a potential new Vanderbilt is emerging from the shadows.
His name? Hugo Chavez.
According to recent statistics, the Venezuelan central bank is the world's 15th largest holder of gold. As a country, Venezuela owns just under 365.8 tonnes (metric tons) of the yellow metal.
Of that sum roughly 58% of the total, or 211 tonnes of gold worth more than $12 billion, is held in London bank vaults. Chavez wants to bring most of it home.
As Bloomberg reported last week:
Venezuelan President Hugo Chavez said he will move forward with a proposal to repatriate as much as $11 billion of gold reserves held in the U.S. and Europe as part of a plan to shift assets away from American institutions.
Venezuela will transfer 99 tons of gold from the Bank of England to the South American country's central bank, Chavez said today on state television. Venezuela also has gold at JPMorgan Chase & Co., Barclays Plc, Standard Chartered Plc and the Bank of Nova Scotia, he said.
Read more>>
