Strictly control gold trading! Global central banks “personally step in,” “directly purchase” domestic gold mines, strictly prevent smuggling and exports.

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As global gold prices break through a historic high of $4,300 per troy ounce, a "hidden war" for control over gold is unfolding between central banks in many countries and transnational smuggling groups.

From Madagascar to Ecuador, more and more national central banks and finance ministries are no longer content with passively managing reserves. Instead, they are "personally entering the field," directly intervening in the acquisition phase of domestic artisanal gold mining.

This move aims to cut off the chain of illegal gold smuggling, recover massive losses in tax revenue and foreign exchange, and firmly grasp this strategic resource in the hands of the nation.

Madness of "Shadow Gold": Helicopters, Gangs, and $2.8 Billion Gone Missing

For gold-producing countries, the surge in gold prices is a double-edged sword. On one hand, it increases potential national wealth; on the other, it further fuels the frenzy of illegal mining and smuggling.

Take Madagascar, a small African island nation, as an example. Its central bank governor, Aivo Andrianarivelo, faces a thorny reality: By his estimate, Madagascar produces as much as 20 tonnes of gold annually—worth around $2.8 billion at current prices. Yet in official export figures, vanilla, cloves, and nickel top the list; gold is nearly "nowhere to be found."

Where did that $2.8 billion worth of gold go? The vast majority flows out of the country through illegal channels, leaving national finances empty and foreign reserves severely depleted. Andrianarivelo told the British Financial Times:

"Crime syndicates possess very advanced transport, including planes and helicopters."

This is not an isolated case. David Tait, CEO of the World Gold Council, points out that up to 1,000 tonnes of gold are produced annually by artisanal and small-scale miners worldwide. He estimates that as much as 50% may fall into the hands of criminals, involving enormous sums of money.

The "unexpected consequences" of high gold prices are not just economic losses, but environmental and social crises. In Ghana, over 60% of waterways have been contaminated with mercury from gold mining; in Ecuador, drug cartels are mining gold to launder money and obtain cash.

Central Bank Acquisition in Practice

To regain control, central banks in many countries have begun to implement or expand "centralized purchase schemes," attempting to use market-based incentives to draw miners away from the black market.

Ecuador has adopted a "price + efficiency" strategy. Diego Patricio Tapia Encalada, head of banking investments and international settlements at the nation's central bank, says the government is expanding their domestic purchase program started in 2016 and opened a new buying station this January in southern Zamora. Its core strength: generous purchase prices and a promise of fast payment within 48 hours. "Price is crucial—it’s key to incentivizing miners not to go elsewhere," he explains.

Madagascar’s central bank is even more direct: By expanding domestic gold buying, it intends to send gold purchased from artisanal miners abroad for refining, aiming to boost official reserves from the current 1 tonne to 4 tonnes. This not only increases reserve holdings, but generates much-needed foreign exchange by selling gold.

Ghana plans to establish a new central purchasing group, "GoldBod," in 2025, seeking to curb illegal mining and associated environmental pollution through regulated buying.

Mongolia’s central bank offers a successful long-term model. Its domestic purchasing program has run for over 30 years, making gold sales a major source of foreign exchange for the bank. Through mandatory inspection at purchasing stations, it has effectively eradicated the use of toxic mercury in mining. Enkhjin Atarbaatar, director of the Central Bank of Mongolia’s financial markets department, notes that now most gold mining is standardized and operated by small and medium-sized enterprises.

Compliance Risk and Technological Breakthroughs

However, "direct purchasing" by central banks is not risk-free. The core challenge: How to ensure gold bought into the vault isn’t "dirty gold"?

Marc Ummel, raw materials director at non-profit SwissAid, warns that many national purchase programs lack adequate due diligence and traceability mechanisms. If poorly managed, central banks can end up buying gold from illegal mining or even "blood gold" tied to armed conflict. For example, the central banks of Sudan and Ethiopia have been accused of buying illegal gold from volatile regions.

Diane Culillas, CEO of Swiss Better Gold, also points out that in periods of high gold prices, regulatory difficulty increases significantly. "Gold always finds a way into the market, legal or illegal."

To solve the traceability challenge, technology is emerging as a new line of defense. Ecuador is currently testing a new system allowing buying stations to use isotope scanners to identify the chemical composition of gold ore and accurately track origin.

The World Gold Council is optimistic, believing that as traceability technology matures, gold falling into "bad actors’" hands will sharply decrease in the next decade.

Risk Warning and DisclaimerThe market carries risks; investment must be approached with caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether the views, opinions, or conclusions in this article suit their specific circumstances. Investment based on this article is at your own risk. ```