Strictly control gold trading! Global central banks are "personally involved" and "directly purchase" domestic gold mines to prevent smuggling and exports.

At a time when the global gold price has broken through the historic high of $4300 per troy ounce, a "secret war" for control of gold is unfolding between central banks and multinational smuggling groups in many countries. From Madagascar to Ecuador, more and more central banks and finance ministries are no longer satisfied with passive reserve management. Instead, they are choosing to "take matters into their own hands" by directly participating in the purchase of gold from domestic artisanal mines. This move aims to cut off the illegal gold smuggling chain, recover significant tax revenue and foreign exchange losses, and firmly control this strategic resource in the hands of the country. The Crazy World of "Shadow Gold": Helicopters, Gangs, and Disappearing $28 Billion For gold-producing countries, the soaring gold price is a double-edged sword. On one hand, it boosts the potential wealth of gold-producing countries, but on the other hand, it also intensifies the madness of illegal mining and smuggling activities. Take the African island nation of Madagascar, for example. The Governor of the Central Bank, Aivo Andrianarivelo, faces a tricky reality: he estimates that Madagascar produces as much as 20 tons of gold annually, valued at around $28 billion at current prices. However, in the country's official export data, vanilla, cloves, nickel, etc. top the list, and gold is almost nonexistent. Where did this $28 billion in gold go? The majority of it flowed out of the country through illegal channels, resulting in no revenue for the country and a severe "bleeding" of foreign exchange reserves. Andrianarivelo told the Financial Times of the UK in an interview, "Criminal organizations 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 globally, artisanal and small-scale miners produce as much as 1,000 tons of gold annually. He estimates that as much as 50% of this gold may end up in the hands of criminals, involving huge amounts of money. The unintended consequences of the high gold price are not just economic losses but also environmental and social crises. In Ghana, over 60% of waterways have been contaminated by mercury from gold mining; in Ecuador, drug cartels are laundering money and obtaining cash through gold mining. Central Banks' Real Battle for Procurement To regain control, many central banks are implementing or expanding "centralized procurement plans," trying to bring miners back from the black market through market-based means. Ecuador is employing a "price + efficiency" strategy. Diego Patricio Tapia Encalada, Director of Investments and International Settlement at the central bank, stated that the government is expanding its domestic procurement plan initiated in 2016 and opened a new procurement station in the southern town of Zamora in January this year. Its core competitiveness lies in offering generous procurement prices and promising rapid payment within 48 hours. "Price is crucial, it is the key to incentivizing miners not to flow into other channels," he explained. The objective of the Madagascar Central Bank is more direct: by expanding its domestic gold purchase plan, it aims to transport the ore purchased from artisanal miners overseas for refining, ultimately raising the central bank's gold reserves from the current 1 ton to 4 tons. This will increase official reserves and provide much-needed foreign exchange through the sale of gold. Ghana established a new central procurement group "GoldBod" in 2025, attempting to curb environmental pollution caused by illegal mining through standardized procurement. The Central Bank of Mongolia provides a successful long-term example. Its domestic procurement plan has been running for over 30 years, making gold sales an important source of foreign exchange for the Central Bank, and effectively eliminating the use of toxic mercury in mining through mandatory testing at procurement stations. Enkhjin Atarbaatar, Director of the Financial Markets Department at the Central Bank of Mongolia, noted that most gold mining operations are now conducted by small and medium-sized enterprises. Compliance Risks and Technological Breakthroughs However, central bank "direct purchases" are not without risks. The core challenge is: how to ensure that the gold bought into the vaults is not "dirty gold"? Marc Ummel, Raw Materials Manager at SwissAid, warned that many countries' procurement plans lack adequate due diligence and traceability mechanisms. If improperly executed, central banks may end up purchasing "blood gold" mined illegally or involved in armed conflicts. For example, central banks in Sudan and Ethiopia have been accused of purchasing illegal gold from conflict-affected areas. Diane Culillas, CEO of Swiss Better Gold, also pointed out that during periods of high gold prices, regulatory challenges significantly increase, "gold always finds a way to enter the market, whether legally or illegally." To address traceability issues, technology is becoming a new defense line. Currently, Ecuador is testing a new system that allows procurement stations to use isotope scanners to identify the chemical composition of ores, enabling precise tracking of their origin. The World Gold Council is optimistic about this, believing that with the maturation of traceability technology, the amount of gold flowing into the hands of "bad actors" will significantly decrease in the next decade. This article is from "Wall Street SeeViews," by Gao Zhimou, GMTEight Editor: Li Cheng.