Has coffee become an unattainable luxury? It is if you live in Venezuela’s capital of Caracas. In July, the price of a cup of coffee was 2 million bolivars. In a country where the minimum wage has been raised to 3 million bolivars, coffee has become as unaffordable as food, housing, clothing, and medicine.
Venezuela is in crisis mode. Ninety percent of citizens live in poverty conditions. Most of them have lost up to 25 pounds due to lack of food. Call it the Maduro Quick Weight-Loss Plan. President Maduro, who has blamed everything but his own socialist policies for the economic disaster, points out that he has raised the minimum wage to 3 million bolivars. For Venezuelans, this is utterly meaningless when prices are doubling every 18 days. Economists predict that hyperinflation will hit an unprecedented 1,000,000 percent by the end of the year. The Bolivar can be officially considered without value.
It is easy to forget that just a few decades ago, Venezuela was one of the richest countries in South America. It had the world’s largest oil reserves and plenty of gold. Along came President Chavez and his populist policies and schemes to retribute the wealth. Following years of overspending and inflation, his successor, President Maduro, has continued those policies, except there is no more wealth left to distribute. In a recent election many consider rife with fraud, Maduro’s win has ensured six more years of hellish disaster for Venezuela. He has announced that he intends to fight hyperinflation by removing five zeroes from the bolivar. His announcement did not include an explanation of how devaluating the valueless Bolivar, even more, will help the country.
Venezuela has gone beyond an economic disaster and is now in a humanitarian crisis. Without food or medicine, the country won’t be able to survive. At this time, it is being propped up by Russian and Chinese aid.
Don’t think #Gold is important? 🇻🇪🇻🇪
In Venezuela, an ounce of the yellow metal would have gone for 211 million bolivars—an increase of more than 3.1 million percent from just the beginning of the year.
— Gold Telegraph (@GoldTelegraph_) August 13, 2018
Venezuela has sold off most of its gold reserves to pay off debts. The country barely has any gold left in reserve. Its massive oil supplies were once its largest export. Now, the country has announced that it will export only one million barrels of oil a day next year, down from three million barrels a day in 2011. Where has all the wealth gone? Between government mismanagement and corruption, no one can say. Of course, President Maduro and his massive army, hired to protect him, aren’t starving. They may be the only ones.
Millions of Venezuelans are fleeing the misery, crossing the borders to any country with jobs and food. Families fortunate enough to have family jewelry is selling them. Other are mining for gold illegally. Illegal gold mining, mostly gold dust, constitutes 90 percent of Venezuela’s current gold production. This illegal gold can be sold at a fraction of the going price.
Selling gold, whether legal or illegal, is the only hope any Venezuelans have to obtain food, medicine, or for an escape across the borders. When a currency loses its value, gold can make the difference between life and death. While it is difficult to imagine a scenario more horrendous than present-day Venezuela, it is good to remember that all global fiat currency is losing in value. The price of gold may fluctuate, or sell on the black market of half its price, but gold will never lose its actual value. For many in Venezuela, gold is the last chance for survival.