Customs officials in India may have a serious problem on their hands.
Beyond the illicit trade of gold in the informal economy (i.e. the “black market”) and rampant gold smuggling in response to restrictive laws and duties related to the precious metal, the outright theft of gold from India’s customs agency now seems to be a recurring headache.
Accustomed to “Lost In Customs”?
For several years, the issue of gold being smuggled past customs in India has been at the top of the list of government priorities as part of a wider effort to curb the country’s gold imports. Measures ranging from an 80:20 rule (20% of all imported gold must be re-exported) to a 10% import duty to banks offering “gold monetization” accounts have all been aimed at this goal. Despite some progress on the problem, the state is still struggling to reduce its trade deficit and stamp out smugglers.
Unfortunately, sneaking gold into India has become an art form. In the past few years, customs has seen gold hidden in an airplane toilet, gold bars hidden in a man’s stomach (he later became ill and required surgery to remove the ingots), and a North Korean official trying to smuggle gold because he felt protected by diplomatic immunity. Moreover, there are several different entry points that smugglers have used to bring the yellow metal into India. Anytime the authorities seem to catch on to a particular channel, such as Bangladesh or Sri Lanka, illegal merchants simply turn to another route, such as through Singapore or the United Arab Emirates.
Missing Gold Bars
On multiple occasions over the last four years, Indian customs have admitted that they have discovered that some seized gold has gone missing from the vault at the Indira Gandhi International Airport. Another 8.5 kilograms (273.3 troy ounces) of gold seized by customs at the airport vanished from the vault recently. The precious metals were replaced with imitation bars of base metal that were merely covered in a golden-hued outer layer.
Previous cases of gold seizures going missing in India also involve fake replacement gold bars. These imitations probably use some type of bronze alloy to achieve the color cheaply. As corny as this type of temporary measure sounds, it’s more common than you might think: A Russian bank was caught last year using fake gold bars as part of its capital reserves.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.