Usually, when we see a headline about gold smuggling, we assume it’s a story from India. However, since the Abe government has raised sales taxes from 5% to 8%, gold smuggling in Japan has exploded. In the year ending in June, over 3 billion yen ($24.3 million) worth of gold has been seized by Japanese authorities in 177 cases. The previous year, there were only eight people caught.
Hong Kong Express
Most of the seized gold has been smuggled from Hong Kong, where foreigners do not have to pay sales tax. Approximately 60% of smugglers captured while bringing gold into Japan originated in Hong Kong. Most smugglers are Japanese, but a large number of Hong Kong residents have also been caught. The nationalities of other smugglers have been Chinese or South Korean.
Yakuza Gold Smuggling
If there’s a way to make money illicitly in Japan, the Yakuza will find it. It’s no different in gold smuggling. Two Yamaguchi-gumi members were caught smuggling two 1kg gold bars each in their luggage during a random baggage check. The haul, worth 18 million yen, was seized.
No One Knows How Big A Problem This Is
Japanese authorities admit that they have no idea how much gold is successfully being smuggled into the country. Most arrests seem to be happening by chance, such as the two yakuza mentioned above. With the Abe government planning to raise the consumption tax to 10%, the profits of gold smuggling into Japan will only grow. Japan may find this as hard to shut down as India has.
India, Still King of Gold Smuggling
Despite some liberalization of import restrictions, gold smuggling in India continues to grow at a torrid pace. Recently released government documents show that Mumbai’s Chhatrapati Shivaji International Airport has set a national record, with 1.150 arrests, and a literal metric ton of gold (1,000 kg) seized in fiscal 2014. Gold watchers expect India to regain the title of “#1 gold importer in the world” from China this year. This statistic naturally does not count the thousands of kg of gold smuggled into the country annually.
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.