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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: John Graybill who wrote (77596)	9/27/2001 11:42:59 PM
From: long-gone	Read Replies (1) \| Respond to of 116927

Further attempts to vilify gold? Why is Reuters always at the base of every anti gold story? Why no by-line? Gold trade's legendary secrecy suits clandestine groups Reuters September 28 2001 at 12:15AM London - While governments around the world scour their files for evidence of funding used for a network of Islamic militants, the murkiness of global gold trading may just leave investigators guessing in the dark. Gold is the perfect haven commodity to which people will turn in times of crisis. But could the notorious secrecy that surrounds trade in the metal have been exploited to raise the huge amounts of cash needed to finance such a network? There is no obvious evidence of shady dealings yet. And analysts say it is unlikely the world gold market has been so successfully used in this way over a period of years. Even so, European officials have named gold and oil as commodities that showed signs of suspicious dealings around the time of the deadly air attacks on New York and Washington, fuelling talk that people with advance knowledge of the attacks may have speculated on the subsequent financial market turmoil. "They [militants] could have amassed the gold over a number of years. Who knows when it started? There are lots of hoarders of gold E it's not outside the bounds of reason," said one London-based analyst, who declined to be named. "It's all do-able. But how and over what period, and what amount, nobody knows," he said. The almost universal acceptance of gold as a means of payment and its easy transport as anonymous bars of bullion have made it an attractive trading instrument if scrutiny is to be avoided. In certain parts of the world, particularly the Middle East, gold has been used as a common currency for thousands of years and frequently features in the ancient history of the region. But more recently, these qualities have attracted less scrupulous parties trading in gold, weapons, drugs and diamonds - often stolen or smuggled - as a non-traceable way of raising millions of dollars to finance rebel and guerrilla groups. In the early 1990s, for example, Chechnya was named as a likely transfer point for smuggling gold stolen from Russian mines. Diamonds and large amounts of oil were also used to raise funds, largely channelled through the ramshackle Russian banking sector, to buy more arms and set up military bases, experts say. Global trade in gold, particularly movements of metal rather than the complex futures and options paper markets, is notoriously opaque. Numbers are imprecise and hard to confirm, adding to the secrecy behind which a criminal can hide. Hoarding by individuals is commonplace in many countries, particularly in Asia. Volumes of gold passing through the international jewellery trade are difficult to establish and most banks are very reluctant to publish their holdings. "In the short term, the market would have seen it going through," said one Swiss bullion trader. "Over the long term, there is no possibility to confirm or deny E because everything is possible if you do it in small quantities." Geography may well have been on the side of the chief suspect in the September 11 air attacks on the Pentagon and World Trade Center, Saudi-born Osama bin Laden, whose main field of operations is believed to be the gold-hungry Middle East. The emirate of Dubai, one of seven that make up the United Arab Emirates, has long been a dominant player in the world gold market and retail trade in the yellow metal is thriving. Although still known as the City of Gold and a major export gateway, the bullion trade of Dubai has been slashed in recent years by market deregulation in India, the world's top gold consumer. This move also reduced endemic smuggling, though this continues on a smaller scale to countries such as Pakistan. "It would be easy if he [bin Laden] was purchasing via front companies as he is quite close to India and Dubai," said another analyst. "But for us to monitor that and assess if he was using the market would be pretty much impossible. "They do have a lot of gold in TT bars going through every day," he said, referring to Dubai's benchmark 10-tola bars equivalent to 3,75 ounces of 24-carat gold. "The majority of Indians don't have bank accounts, so effectively all their investments are in TT bars E and these are generally hoarded." Adding to the difficulties of tracking bin Laden's financing is the Middle East's traditional hawala method of transferring funds - with a handshake and a piece of paper. The individual's word is his bond, and the penalty for default is death. Switzerland, home to a third of the world's offshore wealth due to its secret banking system and also home to some of the globe's biggest bullion dealers, would be an obvious channel for any shadowy gold-related financing, analysts say. This week, however, Swiss authorities said the country's famous banking laws would be no barrier in the quest to track the money trail. They said Swiss banks were scrutinising client lists to match blacklisted names provided by US investigators. "They [militants] could just as easily hold this gold on account in Switzerland. It doesn't need to be smuggled," the first analyst said. "You wouldn't need to keep the physical gold in a hole in the ground in the Afghan hills to fund this. "But if they had bought gold 20 years ago, they wouldn't have done very well. The gold price since 1981 has gone down, steadily and progressively - they would have been better off hanging on to the cash, or buying stocks or gilts." - Reuters businessreport.co.za