Gold surges: World's 'biggest pawnbroker' makes deal
CNBC - Apr 27, 2015
Gold surged above $1,200 an ounce Monday in its best day since January, amid market intrigue surrounding a deal between Venezuela and Citigroup to swap $1 billion in cash for part of the country's gold reserves.
The swap, reported last week, provides cash to President Nicolas Maduro's socialist government as the country reels from a steep drop in oil revenue. Reuters reported Friday that the Venezuelan central bank was expected to have provided 1.4 million ounces of gold in exchange for the cash, and the country would have to pay interest on the funds.
"He had to pawn their gold. That's what they've done. They can buy it back. They have rights of first refusal," said Dennis Gartman, publisher of The Gartman Letter. "They went to the biggest pawnbroker of gold—Citibank."
The deal was cited as one of several things that helped drive gold futures to the highest level in two weeks. Futures for June jumped 2.4 percent to 1,203.20 an ounce. Gold stocks also rallied, with Freeport-McMoran up 5 percent and Newmont Mining up almost 3 percent.
"That was a huge potential seller taken out of the market. It's not an overhang anymore," Gartman said of the Venezuela deal. GLD, the Spdr Gold Trust ETF, was up 2 percent, its best day since late January.
