Venezuela Unlocks Gold Vault for Bank of America Official

An economist with Bank of America was allowed inside Venezuela's bullion vaults as part of a quick, impromptu audit last week.

Francisco Rodriguez, a native of Venezuela who works for Bank of America in New York told Bloomberg this week that he was allowed inside the underground facility when he requested some visual reassurance of the gold's existence during a meeting with Central Bank officials.

Venezuela's bond prices have been gradually slipping amid what many analysts believe is a lack of investor confidence and a predicted default on the horizon. The country allegedly holds $15 billion worth of gold in reserve.

Led by a man in a white lab coat, Rodriguez took a secure elevator several floors underground. When the reinforced doors opened he saw five small cells similar to jail cells.

Rodriguez was surprised at how such a large amount of money could fit in such a small space. “You picture that amount of money requiring a lot of space when, in reality, it all fits in five small cells that were not even full to the top,” Rodriguez said. He was not able to do a full audit of the vault, but made some quick calculations in his head and according to his estimation, the gold was where it was supposed to be. He said that the look at the vault was "largely symbolic yet reassuring."

Rodriguez said that even though he is still optimistic about Venezuela's ability to service its debts, he has been hearing nervous doubt from his investors. One client specifically asked him if the gold was still in Venezuela's vaults, which is what prompted the inquiry.

“It’s not that the majority of the people doubt that the gold is there,” Rodriguez told Bloomberg “But it’s one of these things that linger, something that’s nagging you and makes you wonder: What if it’s not?”

Venezuela holds a reported 71% of its foreign reserves in gold with $13 billion held in storage at a bank in Caracas and another 2 billion at the Bank of England. The country has been reducing its overall currency reserves in recent years and since 2009 has cut 34% of its holdings. Analysts believe this reduction in reserves may be partly to blame for the recent selloff in Venezuelan bonds.

The cost to insure Venezuela's bonds are at the highest rates in the world, 15.1%. The September 16th S&P rating for the country put a 50% chance of non-repayment of the bonds within two years.