You may wonder how China keeps hoarding gold secretely. One way they are doing it is through gold smuggling. China aquires gold via the black market through countries such as the Phillippines.
The Phillippines is the 18th largest gold prodcuer in the world. By Phillippine law, the Central Bank of the Phillippines called the Bangko Sentral ng Pilipinas is supposed to purchase all gold from local Phillippine miners wheter public or private. However, Bullion Street reports that "nearly 95 percent of gold trade in the country made through black markets."
Why would a Filipino mine sell their gold via the black market as opposed to selling it to the Bangko Sentral ng Pilipinas? The central bank charges a 7% tax on all god purchased from the mines. So to the miners it makes business sense. Sell to someone else who does not charge the 7% tax and make more profits. Reports are saying, that the someone else are countries like China who get the gold eventually after gold is shipped to Hong Kong.
No one knows for sure hiw much Phillipine gold eventrually ends up in Chinese markets. We do know that
"The Philippines, the world’s 18th largest gold miner, produced just over 1 million troy ounces of gold in 2011, worth $1.6 billion at current prices.
The average gold production in the country is 30 tons per year, 70% of which comes from small-scale miners."
If China gets a decent sized portion from the Phillippines and other countries, the hoard that is stashed in China could be much much bigger than realized.
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