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Secret Silver Stockpiles and Gold's Black Market

Wealth Daily's Weekend Edition

Written by Brian Hicks
Posted December 9, 2012

You've been reading about gold and guns ever since the election results were in...

The two are certainly not mutually exclusive; charts for both are hyperbolic as interest in physical bullion soars harmoniously with record-breaking gun sales.

Life, Liberty, and the Pursuit of Happiness

Individuals are hungry for wealth in these poverty-stricken times — and nations are hungry for certainty, a way to protect their economy from currency debasement.

People are stocking up on gold and guns to protect their families and their wealth.

What people haven't been talking about nearly as much is how this mentality has created a burgeoning black market for the precious metals sector.

Capitalists and survivalists alike are making a living the best they can.

For some, this means engaging in illegal mining activities and gold smuggling.

The Philippines and Mongolia are two prime landmasses, rich with minerals and metals...

Miners know this and are taking advantage of the opportunity. Mongolian gold ninjas have risked their lives to engage in one of the most lucrative gold rushes of the century to support the black market demand for gold in China.

The Business Savvy Game

Meanwhile, the Philippine government (much like our own) continues to pass new laws and enforces outrageous taxes to get their “fair share of other people’s sweat, especially related to mining projects.”

After a 7% tax rate was required for precious metal sales last year, smaller producers began selling to black market smugglers instead...

According to Assistant Central Bank Governor Manuel Torres, head of the refinery operations, roughly 95% of all gold mined in the Philippines is being sold to smugglers — and transported out of the country 100% illegally.

Expert Simon Black explains the discrepancy between how much gold smuggling is reported and how much is actually taking place:

In 2011, central bank gold purchases dropped at an annualized rate of 4%, then 76%, then 88% during the second, third, and fourth quarters. In the first quarter of 2012, gold purchases were down 92%. It’s staggering.

Most of this smuggled gold finds its way here to Hong Kong, and then onward to China, where there is a voracious demand for gold despite rising prices. 

Of course, it’s perfectly legal to bring gold, tax-free, into Hong Kong.

This is why when Hong Kong reports its official trade statistics, "gold imports" from the Philippines are 30 times higher than what the Philippines government reports as "gold exports" to Hong Kong.

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Nations like China, India, and Iran have been stockpiling silver and gold at unprecedented levels to protect their economies from the looming crisis. 

This hasn't been easy with Western sanctions, but billions' worth of silver and gold has been shipped to Dubai on behalf of Iranian buyers — $2 billion worth of gold was shipped to Dubai in August alone.

Experts believe an undisclosed, but quite large, number of carriers are behind the smuggling arrangement.

Obviously, the U.S. isn't happy about this...

The government is in the midst of setting up new sanctions against Iran that could force Turkey to end their “gold deal” with Iran.

Due to global economic uncertainty, Iran demanded back in February that Turkey pay for international goods solely in gold. So far Turkey has complied, exporting “massive quantities of gold” per their deal with Iran.

Between January and September 2012, Turkey exported at least $6.4 billion in gold to Iran (and that's only what was officially reported). Iran has Turkey pigeonholed into this agreement, as it supplies 18% of Turkey's gas and 51% of the country's oil.

Evidently, raging gold demand is creating a supply crunch that has nations desperate for deposits and mines.

A number of international deals are under way, and a public rush for the yellow metal will clear retailers' shelves in no time.

This is only the beginning...

Best wishes for a prosperous future,

Brittany Stepniak Signature

Brittany Stepniak
for Wealth Daily

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