Is Gold Being Dumped Through Afghanistan?
By: David Freedom
Wed, Dec 26, 2012
Reports have surfaced recently detailing large shipments of gold leaving Afghanistan for Dubai. The gold outflows from Afghanistan are difficult to measure, but a recent New York Times report indicated that about $14 million in gold was carried out of airports over a two-week period in October.
It’s clear gold is leaving Afghanistan, but why? Last week Daoud Sultanzoy, a political analyst and former Afghan MP, stated in an interview with RT that there was ‘dumping of gold’ by regional players. Gold is flowing out of Afghanistan, but not because regional players are dumping it. For simplicity, I’ll categorize the outflows into two main sources: 1) wealthy Afghans fearing NATO troop reduction; and 2) Indirect trade with Iran.
Wealthy Afghans –
Due to the extreme corruption in Afghanistan’s banking system, almost 90% of all financial activity is done outside of banks. Wealthy Afghans who don’t have bank accounts, are sending their wealth to Dubai as protection against uncertain economic conditions, related to the scheduled NATO withdrawal. It’s not just gold fleeing Afghanistan – Afghan property investment in Dubai through June 2012 was estimated to be over $60m. In March of this year the Afghan central bank imposed a limit of $20,000 and still it’s estimated that as much as $8b in cash may leave via Kabul airport this year – almost a 100% increase over 2011.
* Amounts in US dollars
In addition to the fear of instability as the NATO forces withdrawal, there are large amounts of wealth being accumulated through illegal operations. Following the US-led invasion, opium (raw material for heroin) production increased from 185 tons in 2001 to 5,800 tons in 2011.
Afghanistan now produces about 80% of the world’s heroin supply. The Afghan drug trade is responsible for huge amounts of wealth, huge amounts of wealth that needs to be cleaned. Gold is a perfect asset for these drug groups due to its ability to be deposited without question – because gold is money without a trace.
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