The Venezuelan bolivar has already lost 73 percent of its value in 2021 alone and the IMF estimates the annual inflation rate will reach 5,500 percent by the end of 2021.
US dollars are the exchange medium of choice in Caracas and other large cities, while the Colombian peso dominates along the Colombian border, particularly in the regional city of San Cristobal. The Brazilian real is current along the southern border with Brazil and the euro and cryptocurrencies have also found niche uses.
What is wonderfully surprising is the spontaneous emergence of a pure gold currency in a remote region of southeastern Venezuela around the towns of Tumeremo and El Callao.
Despite the violence and lawlessness, jobless Venezuelans from far and wide are flooding into the area to work in thriving illegal mines in exchange for payment in gold nuggets.
As a result, gold flakes, which are peeled off raw nuggets with hand tools, have become the currency of choice in the region with prices for commodities and services quoted in grams of gold.
Half a gold gram buys you a one-night stay in a local hotel, while a meal for two at a Chinese restaurant and a haircut will cost you a quarter of a gram and an eighth of a gram, respectively. The gold flakes are carried in people’s pockets—usually wrapped in the nearly worthless bolivar notes.
While some shops are equipped with scales to weigh the gold flakes, most sellers and their customers have become so familiar with the flakes that they evaluate them by sight. For example, the barber and his customer who transacted for the haircut agreed that three gold flakes equaled the one-eighth gram price (approximately $5.00).
Gold is also starting to penetrate the nearby cities, such as the regional capital Ciudad Bolivar, as stores in shopping malls gladly accept the gold in exchange for dollars from miners who are seeking to cash out.