goldman sachs & venezuela's gold...

What Is Goldman Sachs Doing With Venezuela's Gold?

...Venezuela, it seems, has a problem. In its foreign currency reserves, where most countries keep foreign currency, Venezuela has a lot of gold, because its late President Hugo Chavez really liked gold and wanted to "move away from the 'dictatorship of the dollar.'" It has rather fewer dollars, and it turns out that if you want to buy goods and services in international trade, dollars are more useful than gold. Thus the problem.

The normal way to solve that problem is to sell some gold to someone who has dollars. Then you'll have less gold, but more dollars, and the dollars can be used to buy goods and services. But if you're Venezuela, there are problems with this too. For one thing, it seems like sort of a repudiation of your late president's policies. For another thing, spending down your gold reserves might suggest that you're in a bit of a tight spot financially, which though true is awkward.

Also, gold was worth $1,800 an ounce a year ago and is now worth like $1,240 an ounce, so it feels sort of crummy to sell a bunch now.

In comes, apparently, Goldman Sachs? Here is a thing that seems to be happening:

Venezuela newspaper El Nacional reported Tuesday that Venezuela’s Central Bank and Goldman Sachs are ready to sign an agreement to swap or exchange international gold reserves with a start date in October 2013 until October 2020.

The negotiated amount is equivalent to 1.45 million ounces of gold, valued at US$1.8 billion at today’s prices, which is to be deposited in the Bank of England with the transfers made directly to Goldman Sachs once delivery times are stipulated. Goldman Sachs will then pay U.S. dollars for the gold.

The full read is at http://www.bloomberg.com/news/2013-11-25/what-is-goldman-sachs-doing-with-venezuela-s-gold-.html

My comments:
Why am I not surprised? I wonder what will happen to the gold that Goldman gets hold of? For example, in the Comex world of fractional paper gold trading, will this gold be used to back tens of millions of ounces of paper gold trading?