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Plot uncovered to smuggle 94 kilos of gold into the UAE from an African state

Posted on 27 December 2011 with 2 comments from readers

For a country with no official gold reserves the UAE is still a major force in the global gold trade. State news agency WAM yesterday reported that security officials have foiled a money laundering operation that involved the smuggling of 94 kilograms of gold from Africa into the oil-rich state.

The hoard of gold was to be smuggled in oil tankers from an unnamed African state into a neigbouring country and then transported by two gang members to the UAE. The gold was apparently to be deposited in UAE banks and then currency would have been transfered overseas.

Arrests made

Police arrested one gang member trying to enter the UAE from Saudi Arabia at the Ghuwaifat checkpoint with around $3 million in Saudi currency, according to The National newspaper.

No further details of the smuggler’s plan have been revealed, presumably to avoid giving away their modus operandi to others. However, gold is often used in money laundering because it is very difficult to trace and can easily be melted down.

That said once you deposit gold in a bank you require certification and it obviously becomes visible in the banking system. Indeed, that is probably where the smugglers made their mistake, assuming the UAE was open to this sort of deal while the authorities have strict anti-money laundering regulations in place.

Arab Spring gold?

For a transfer of this size the speculation has to be that this gold was from government sources, perhaps from one of the regional regimes facing sanctions, or from a country in chaos after the Arab Spring.’s most popular section is gold and silver (click here) reflecting its importance in the region.

Gold is the ultimate fungable asset as there is no third party to its value. But even that has its limits because in order to spend your gold it first has to be turned into cash.

There are clearly plenty of regimes in the region that currently need such cash to survive and selling off official gold reserves is one answer. But you do have to find a way to do it. The UAE is clearly not that place, though begs the question how much cash is now legally flowing into the federation from collapsing regimes?

Posted on 27 December 2011 Categories: GCC Economics, Gold & Silver

2 Comments posted by readers:

Comment by Bill in Slidell - 27 December 2011

MarketWatch has an interesting article by Laura Mandaro about a BIG coming China slowdown that Vikram Mansharamani thinks will hit Australia, South Africa, Canada, and Brazil, along with the big miners and shippers. The commodity markets seem to be signaling it for a while now, as has their stock exchanges.
I agree with the author about one investment. Oil will go up. The Iranian VP is making threats to close the Straight in an obvious attempt to talk oil prices up, as I write. He need not. Although if China hits the 4% growth rate Vikram predicts, oil won’t go up too fast.
The amount of empty construction in China is mind boggling. It has to make you wonder about their banking system and shadow banking system. I wouldn’t invest one penny there. It will be interesting to see if they actually try to run that new super fast train. It will destroy tracks and wheels at a prodigious rate. One tiny crack in a wheel at that speed and you’re dead as it explodes. No one will survive a crash at that speed. It will be like a plane crash. You’re dead. Everything near the tracks will get levelled too. Train wheels and drive motors are heavy. They can go through quite a few buildings before coming to rest.
I’m glad to hear that the UAE has some rule of law. That is very important for long term business investment.

Comment by The Willing Banker - 28 December 2011

Those who have read the chapter on Dubai in Jim Rickards’ latest book will not be surprised!

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