
Drug lords make billions smuggling gold to Miami - johnny313
http://www.miamiherald.com/news/local/community/miami-dade/article194187699.html
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patio11
You might also be interested in:
[https://www.nytimes.com/2017/06/14/business/japan-gold-
smugg...](https://www.nytimes.com/2017/06/14/business/japan-gold-smuggling-
crime-rates.html)

Gold smuggling, which Japan is getting _mildly_ more serious about combatting,
is largely just about tax fraud. Japan has a VAT-style consumption tax. When
you buy gold you pay the seller 8% of the value of the gold you are buying.
This includes if you buy it from e.g. a natural person.

When you legally import gold, you pay the same rate as a duty. So in the
ordinary course of business, you import the gold (pay 8%), you sell the gold
onto someone (who pays you the 8% back and holds that 8% on their own books),
who sells it onto someone (who pays them the 8% back and holds the 8% back),
etc ad infinitum. All gold in Japan essentially has an 8% tax asset virtually
attached to it.

So if you can create gold in Japan which came "from nowhere", you get instant
8% of the gold created in profit, by selling it at market. Presto: join the
ranks of smugglers by the simple expedient of buying $10k of gold abroad and
selling it when you get home, collecting an easy $800.

$10k of gold is smaller and lighter than a Gameboy, and if you can bring a
Gameboy into the country, you could bring in $10k of gold instead.

This is lucrative, simple, socially viral ("Did you hear that you can fly for
free? All you need to do is buy gold abroad. It's always more expensive in
Japan; taxes or some nonsense."), and never requires you to deal with the
criminal element, other than yourself. Both transactions are with well-
regulated gold firms in well-lighted commercial districts and don't strike
either shop as being _at all_ out of the ordinary.

So the government is trying to be very splashy about educating people that a)
this is, factually, smuggling and b) the kid gloves are coming off... at some
point in the ill-defined future.

~~~
IkmoIkmo
Hah, really interesting. I wonder how they do the money-laundering though.
Perhaps they never do try to get the cash back into the legal system, but
we've heard of people profiting >1m, meaning they've done 10m in cash
transactions. At some point you want to use it, and need to account for it.
Not sure what it's like in Japan, but typically notaries or even expensive car
dealers will not just let you bring a bag of cash to buy an asset.

~~~
patio11
Japan has AML laws but, broadly, has a much higher tolerance for high-value
cash transactions than e.g. the US does, particularly if you read as obviously
socially established.

If you're in possession of $50k cash in the US, presumption is that you're
crooked in at least one way. If you bring $800k cash to a real estate closing
in Japan, presumption is heavily in favor of "Ahh, a traditionalist."

(This assumes, regretfully but accurately, that you don't have a complicating
factor like being a foreigner while doing it...)

------
kurthr
Yes, Gold is the original smugglers currency. Yes, gold extraction is
typically exploitative and often environmentally destructive. No, the gold in
Miami is not used in your mobile phone or electronics, because those aren't
manufactured in the US. Look at Africa and Asia for those sources... even
though it's a global market.

Child labor in mining:
[http://www.ilo.org/ipecinfo/product/download.do?type=documen...](http://www.ilo.org/ipecinfo/product/download.do?type=document&id=4146)

------
WalterBright
> By using drug profits to mine and sell gold to American and multinational
> companies, criminal organizations can launder “staggering amounts of money,”

Another disaster caused by making drugs illegal.

~~~
ImSkeptical
I absolutely think drugs should be legal or decriminalized depending on the
drug. However, blaming this on US drug policy is an overreach. The United
States has illegal drugs, but no encampments of slaves and child sex slaves
destroying the environment to dig for gold. The culprits here are the corrupt
and weak government of the countries like Columbia that permit such activities
and, of course, the criminal gangs that execute these activities.

~~~
kjksf
If you want to play the blame game, US is more to blame because that's where
the money comes from. US could stop that by legalizing drugs and therefore
cutting of source of cartel's income.

Columbia's sin is that it's poor and there's hardly anything they can do about
it.

If you think that US is morally superior to "weak, corrupt" Columbia, consider
this: during prohibition "Al Capone bought legal immunity by administering
bribes to police and politicians. He practically paid off every law
enforcement agent and politician in the districts in which he operated his
illegal businesses." (source:
[http://www.umich.edu/~eng217/student_projects/nkazmers/organ...](http://www.umich.edu/~eng217/student_projects/nkazmers/organizedcrime2.html)).

There's no escaping economics.

If your opponent (be it Al Capone or Pablo Escobar) can spend hundreds of
millions of dollars on bribes, he will beat you unless you have billions to
spend on counter measures.

And if you think that "it was then, it wouldn't happen in US today", consider
Citizens United or net neutrality repeal, paid for with legal bribes by large
corporations against the wishes of majority of citizens.

Comcast doesn't do anything illegal so they don't have to hide their
activities the way drug lords do but the underlying mechanic is the same: they
have millions to spend and they figured out a way to spend it to buy
legislation that is good for them from "weak and corrupt" US Government.

To reiterate: the issue is not moral failing of Columbia or Mexico but a
simple fact that rich and powerful always find a way to corrupt the system.

The bigger the imbalance of power, the bigger the corruption. In extreme cases
you get extremely rich actors (drug cartels) operating in a relatively poor
countries.

We should be thankful that US is a rich country so it can win at least against
violent criminals but let's not kid ourselves: US is plenty corrupted.

~~~
ImSkeptical
It's a strange form of chauvinism to assert that the US is responsible not
only for it's misdeeds, but also the misdeeds and deficiencies of others. By
claiming that the US is more responsible for the problems of Columbia than
Columbians are, you tacitly deny them agency.

I would never say the US is without corruption, but it is less corrupt than
Columbia. I don't think that's a function of wealth, there are poorer
countries less corrupt than the US.

However, regardless of the corruption of the US, Columbia - the government and
cartels operating there, are responsible for their own misdeeds. The money
comes from America - sure. So legalize the drug trade in Columbia and handle
it that way, or stamp out the cartels. What's not acceptable is to allow the
cartels to corrupt and corrode society and commit evil on innocent people.

~~~
kjksf
Do you know why Columbia can't just legalize drugs in a meaningful way?

Because US won't let them.

Source: Obama Administration
([http://www.nytimes.com/2012/04/15/world/americas/obama-
says-...](http://www.nytimes.com/2012/04/15/world/americas/obama-says-
legalization-is-not-the-answer-on-drugs.html)).

I imagine if Obama was opposed then anti-marijuana Jeff Session is super extra
opposed.

Do you know why Columbia can't just "stamp out the cartels"?

Because US spent billions helping Columbia do just that and they failed. For
decades they tried every tactic you can imagine: destroying crops, military
raids etc.

The definition of insanity is doing the same thing and expecting different
results.

By that definition trying to stamp out cartels by force is insanity.

We know you can't do it.

Columbia has as much chance of destroying cartels as US has getting Americans
to stop doing drugs.

BTW: the really bad violence in Columbia started when US pressured Columbia to
create a law allowing extradition of narcos to U.S. Escobar started a wave of
violence against the government trying to pressure it into eliminating the
law.

Let's not be naive here: Columbia agreed to US demands because US was even
bigger threat to them than narcos.

My point is not to argue that Columbia has no part in the mess.

But I would assign much bigger part of the blame to US.

US was an architect and a sponsor of Columbia's failed war on cartels. A DEA
agent participated in the raid that killed Pablo Escobar. US Special Forces
were training Columbian anti-drug army. US supplied military equipment and
billions of dollars to be used to fight drug lords.

Failure to eliminate drug trade in Colombia is as much U.S. failure as it is
Columbia failure.

US, not Columbia, spent last 45 years championing failed drug policies
internationally.

We won't have meaningful change until most countries legalize drugs and most
countries won't do it unless U.S. also does it.

All roads lead to Rome. Or in this case Washington, DC.

------
deepGem
This is why I hope, really hope, that bitcoin or some crypto currency becomes
a stable value store, pushing people away from the likes of Gold, diamond.
Almost all these resource based value stores are exploited - gold, diamonds,
oil, animal skins, etc. There seems to be no end in sight to check the illegal
ways of extracting these resources, since the profits are so high. The only
way ,in my head at least, to check the illicit activities is to shift that
value to something else which is not amenable to such exploitative extraction.

~~~
mythrwy
Not sure what you mean by exploitive, but electricity is also usually rough on
the environment.

~~~
deepGem
True but we don't hear such atrocities committed in producing electricity. I
am talking of large scale human exploitation not just the environment. Though
I must admit the coal mining is heavily exploited in poorer countries.

~~~
sfifs
Ever heard of mass forced migration for hydroelectric projectsa and air
pollution in cities from coal burning causing asthma

~~~
deepGem
Forced migration != slavery, forced prostitution and mercury poisoning of
drinking water. Yes, I am well aware how electricity generation degrades the
environment, but there is a ray of hope that renewables will kick in and take
some or most of that degradation away. I don't see such a line of sight for
the issues raised in that article.

------
valuearb
“Over the past two decades, as the U.S. war on drugs undercut the cash flow of
narco-traffickers, kingpins diversified”

Unsupported. The war on drugs likely increased the cash flows for surviving
traffickers. Either way, diversification always happens when making massive
profits in a capped or risky market.

------
njarboe
"America’s addiction to the metal burns as insatiably as its craving for
cocaine."

Article is way to sensationalist to be worth spending time reading.

~~~
catacombs
How? It's an interesting investigative piece that explains a serious issue.

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Animats
The US does not charge import duties on gold. Why smuggle it?

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kirillzubovsky
Why is the police destroying the machinery instead of shipping it off to the
city and using it? Seems like a gross waste, especially since these mines are
right on the river. Besides, aren't dead robots going to only further pollute
the environment?

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flatfilefan
That Miami gold import of 2% of USA gold reserves makes 2%8000=160 tons.
That’s roughly how much Russia is adding to it’s reserves officially every
year since about 2008. China seems to match that exactly. Is this where’s real
economy happens now?

