Strict control over gold trading! Central banks worldwide "get involved personally," "directly purchasing" domestic gold mines to prevent smuggling and exports

As global gold prices break through the historic high of $4,300 per troy ounce, a "covert war" over gold control is unfolding between central banks of various countries and multinational smuggling groups.

From Madagascar to Ecuador, an increasing number of national central banks and finance ministries are no longer satisfied with passive management of reserves, but are choosing to "get involved" directly in the acquisition of domestic artisanal gold mines.

This initiative aims to cut off the illegal gold smuggling chain, recover huge tax revenues and foreign exchange losses, and firmly hold this strategic resource in the hands of the state.

The Crazy "Shadow Gold": Helicopters, Gangs, and the Disappearance of $2.8 Billion

For gold-producing countries, the soaring gold prices are a double-edged sword. On one hand, it enhances the potential wealth of gold-producing nations; on the other hand, it exacerbates illegal mining and smuggling activities.

Take the African island nation of Madagascar as an example. The central bank governor Aivo Andrianarivelo faces a tricky reality: he estimates that Madagascar produces up to 20 tons of gold annually, worth about $2.8 billion at current prices. However, in the country's official export data, vanilla, cloves, and nickel top the list, while gold is almost "nowhere to be found."

Where has this $2.8 billion worth of gold gone? The vast majority has flowed out of the country through illegal channels, leading to a significant loss of national revenue and a severe "hemorrhage" of foreign exchange reserves. Andrianarivelo stated in an interview with the Financial Times:

"Criminal gangs have very advanced transportation tools such as planes and helicopters."

This is not an isolated case. David Tait, CEO of the World Gold Council, pointed out that up to 1,000 tons of gold are produced annually by artisanal and small-scale miners worldwide. He estimates that as much as 50% of this gold ends up in the hands of criminals, involving huge sums of money.

The "unexpected consequences" of high gold prices not only lead to economic losses but also trigger environmental and social crises. In Ghana, over 60% of waterways have been contaminated with mercury left by gold mining; in Ecuador, drug gangs are using gold mining to launder money and obtain cash.

Central Bank Storage Practices

To regain control, multiple central banks have begun to implement or expand "centralized acquisition plans," attempting to pull miners back from the black market through market-oriented means.

Ecuador has adopted a "price + efficiency" strategy. Diego Patricio Tapia Encalada, the country's central bank investment and international settlement director, stated that the government is expanding its domestic acquisition program that began in 2016 and opened a new acquisition station in the southern town of Zamora this January. Its core competitiveness lies in offering generous acquisition prices and promising quick payments within 48 hours. "Price is crucial; it is the key to incentivizing miners not to turn to other channels," he explained.

The goal of the Madagascar central bank is more direct: by expanding the domestic gold purchasing program, it aims to transport ore purchased from artisanal miners overseas for refining, ultimately increasing the central bank's gold holdings from the current 1 ton to 4 tons. This will not only increase official reserves but also generate urgently needed foreign exchange through gold sales Ghana established a new central procurement group "GoldBod" in 2025, attempting to curb environmental pollution caused by illegal mining through standardized acquisitions.

The Central Bank of Mongolia provides a long-term successful example. Its domestic acquisition program has been running for over 30 years, making gold sales an important source of foreign exchange for the country's central bank, and effectively eliminating the use of the highly toxic metal mercury in mining through mandatory inspections at acquisition stations. Enkhjin Atarbaatar, Director of the Financial Markets Department of the Central Bank of Mongolia, pointed out that most gold mining is now standardized and operated by small and medium-sized enterprises.

Compliance Risks and Technological Breakthroughs

However, the central bank's "direct purchase" is not without risks. The core issue is: how to ensure that the gold bought into the vault is not "dirty gold"?

Marc Ummel, Raw Materials Director of the non-profit organization SwissAid, warned that many countries' acquisition programs lack comprehensive due diligence and traceability mechanisms. If not handled properly, the central bank may end up acquiring illegally mined gold or even "blood gold" linked to armed conflict. For example, the central banks of Sudan and Ethiopia have been accused of purchasing illegal gold from turbulent regions.

Diane Culillas, CEO of Swiss Better Gold, also pointed out that during periods of high gold prices, regulatory difficulties significantly increase, stating, "Gold always finds a way to enter the market, whether legally or illegally."

To address the traceability challenge, technology is becoming a new line of defense. Currently, Ecuador is testing a new system that allows acquisition stations to use isotope scanners to identify the chemical composition of ores for precise tracking of their origin.

The World Gold Council is optimistic about this, believing that as traceability technology matures, the amount of gold flowing into the hands of "bad actors" will significantly decrease over the next decade