The New Gold Rush

In Rangoon last week Burmese customs men proudly reported their "biggest haul since 1952": the discovery of $31,000 in smuggled gold aboard the Dolpheverett, a Liberian-registered freighter operated by California's Everett-Orient Line. In Calcutta the Dolpheverett's sister ship Rutheverett is being confiscated outright by the Indian government. After a week-long search during which they all but dismantled the ship, Indian customs officers uncovered aboard the Rutheverett $700,000 worth of gold stashed away in hidey-holes ranging from the ship's garbage bin to secret compartments.

Americans, forbidden since 1933 to trade in gold, by now consider gold a harmless if expensive substance used to make wedding rings and to fill teeth. But in Asia, the traffic in gold--much of it illegal--is booming as never before. Indian brides offer gold bangles as dowry and families salt away their savings in gold jewelry. When Indonesia's President Sukarno arbitrarily reduced the value of the rupiah 75% overnight. Indonesian businessmen who had thoughtfully stuffed their godowns with gold bullion not only escaped losses but reaped fantastic profits. All over Asia, trade in gold has become the favored device for evading national foreign exchange controls.

Wolf & Son. Center of the Asian gold trade is the Portuguese colony of Macao, where dealers operate openly, since Portugal consistently refuses to sign an international agreement to regulate gold. Since 1946, by the colony's own report, some $601 million worth of gold has poured into--and through--Macao (pop. 200,000). Most of it also passed through the hands of Dr. Pedro Lobo, onetime chief economic officer of Macao, who is credited with monopolizing gold import licenses for Macao's "gold syndicate."

Now nearly 70, Lobo (Portuguese for wolf) is gradually turning the business over to his son Rogerio. 36, who is one of the owners of the single-plane airline that flies gold in from Hong Kong, only 15 air minutes away. On arrival each shipment of gold is meticulously weighed by Portuguese authorities determined to collect the import duty of 42-c- an ounce, the biggest source of Macao's revenue. After the weighing, the authorities discreetly withdraw. Then the syndicate's employees melt down the international gold bars (usually weighing around 27 lbs.) into the portable 9-oz. bars or thin gold sheets preferred by smugglers.

Over & Back. Chief suppliers of Macao's gold are a clutch of old-line Hong Kong trading firms, which buy it legally on the London gold market at a pegged price, then pass it along to Lobo's syndicate for a "service charge." Gold dealers in Hong Kong say that it is the Portuguese who let the gold slip into illegal channels. The Portuguese, in turn, blandly declare that the bulk of the gold brought into Macao is immediately smuggled back to Hong Kong in junks or on ferries.

Once back in Hong Kong, the gold goes into the vaults of some 200 Chinese banks where it may be used for such delicate transactions as financing a shipment of Calcutta opium to Hong Kong or buying off Chinese Communist officials who have put the squeeze on the relatives of rich overseas Chinese businessmen. But the final market is most often India. Indian central bank officials estimate that India's private gold holdings exceed $3.6 billion (at the U.S. gold rate), up from $3.2 billion in 1948. The enormous trade in smuggled gold is a major reason India is chronically short of foreign exchange; one ounce of gold smuggled into India represents a loss of $35 in hard currency.

In their constant battle with gold smugglers, customs men all over Asia have come to accept as routine the typewriters with camouflaged gold space bars, the shipments of gold-filled salmon, the rump-heavy laying hens and the resourceful uses of just about every human orifice. But though the customs men know most of the tricks, they manage to intercept, by one estimate, less than 5% of the smuggled gold. Shrugged one cynical old hand in the gold trade: "After all, just for looking the other way when a bag of gold goes over the rail of an incoming steamer and onto a harbor boat, a customs man can pick up a year's salary."

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