Unfortunately, it's as we long suspected...The would-be largest gold operator in Venezuela may not be, as Venezuela has denied the company's exploration permit. "The Director General cites sensitivities surrounding indigenous peoples, the small miners and the environment in the area generally known as the Imataca Forest Reserve," said Cyrstallex in a statement. They added they will respond "vigorously in accordance with its legal rights to protect the interests of our shareholders." As skeptical as we remain that Venezuela will allow foreign mining companies to enrich themselves with the deposits, Venezuela may be punishing KRY for not working the copper in their mining plan. This was asked by the government and Gold Reserve (GRZ) has complied. Is denying the exploration license a major change of policy from the top or just aimed at KRY at this time? We simply don't yet know. But even if the foreign mining companies are allowed to develop the over 20 million ounces of gold, we remain very sceptical that they would be left alone once production begins. In the least, we would think a significant production tax hike would be implemented. In 2005, we became very negative on Venezuelan prospects for the simple reason that they are dealing with West-hating, self-described Communists with a less-than-kind track record. In September 2005, we offered the following rant: Hugo Chavez's idea of "Super Flow-through". Karl Marx was so economically inept that he once sold his last pair of pants to buy cigars to smoke. He was chronically unemployed, lived in filth, and loved to get drunk and get chased by the London police. Yet, one of the biggest social experiments in the history of the world was built on his economic theories. According to the Communist museum in Prague, approximately 100 million people died under Communism (the most lethal "ism" ever). Chavez today is apparently ready to move as far as Fidel Castro did when his rag-tag boat of mercenaries finally overthrew the Batista regime and then kicked out all Western interests. "Las Cristinas belongs to Venezuela. We will build a national mining company there," he said during a television speech. What's worse, he added, "If they don't like the Venezuela's model, foreign investors can pack up and leave...We don't need them." ... It's now official: under Chavez, investing in Venezuela is not investing - it's gambling.