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Why are there no gold auctions?

  • Published at 10:47 pm April 4th, 2018
Why are there no gold auctions?
The demand for gold in Bangladesh is 30-40 tons a year. Since there is no gold mine in the country, traders have to import gold to meet the demand of such a huge quantity of the yellow metal. But the reality is gold is not imported legally. As a result the demand is met by smuggled gold. Traders are not inclined to import gold since it is easier to bring it illegally. They are also not interested to buy the gold deposited to Bangladesh Bank. Sources said during auctions traders offered lower price than the actual price of gold. They offered less than Tk3,000 for gold which price is actually Tk 40,000, which is why the central bank has not been holding any auction for the last nine and a half years. Former Bangladesh Bank spokesperson M Mahfuzur Rahman said: “Traders can profit from the smuggled gold. Maybe that is why they offered very low prices for the gold deposited to Bangladesh Bank during the auction.
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“During the auction in 2008 the traders said there is no demand for gold in the country.” He also said: “Gold business is transparent all over the world but it is not transparent in Bangladesh. It happens only in Bangladesh that prices of gold rise after mixing something else with it.” “Gold is a sensitive issue. This is a kind of currency. Traders use smuggled gold. Even after that actions are not taken against them,” said former National Board of Revenue (NBR) chairman Abdul Mazid. “Gold is such an asset which is evaluated internationally. So there are restrictions and limitations on the laws relating to it. And smugglers take the advantage of any limitations,” he said.
Also Read- Why do traders buy smuggled gold?
Gold traders are now in trouble as the smuggling has declined. Bangladesh Jewelers’ Samity—an association of gold traders—wrote a letter to Bangladesh Bank Governor Fazle Kabir seeking permission to buy smuggle gold. Since gold import is a complicated process traders are less interested in it, said the association’s General Secretary Dilip Kumar Agarwala. “Even though the demand for gold has increased traders cannot import it due to complications,” he said. Dilip shared his own experience of the complications. “I went to a bank in January [to start formalities] to import gold. Before that I completed all formalities in the commerce ministry and others offices. “But Bangladesh Bank started so many queries that finally I could not import gold.” He also said: “Maybe Bangladesh Bank does not want anybody to import gold. That is why we sent a letter to the governor to buy smuggled gold.” Sources said the gold market in the country is mainly dependent on smuggling. A portion of the smuggled gold goes to jewelers shops. About 90% of the demand for gold is being met up through smuggled gold.
Also Read- What are the barriers in importing gold?
To control the smuggling, a strong syndicate of gold trafficking has been formed in Bangladesh and West Bengal. The syndicate has links with a number of influential businessmen, staff and employees of the airports. The Customs Intelligence and Investigations Directorate (CIID) seized 211 kg gold and 368 gram diamond from various showrooms of Apan Jewelers. Police and customs officials or Airport Armed Police Battalion (APBn) members seize smuggled gold and deposit them to Bangladesh Bank. There is a huge pile of gold in the central bank since there has been no auction for about a decade. The last auction was held on July 23, 2008. As many as 21.822 kg gold was sold in that auction. According to Bangladesh Customs and Bangladesh Bank, about 2,000kg gold had been seized from different airports in the last four years. Since independence more than 5,000 kg or 125 maund gold were smuggled into Bangladesh. Of them, nobody was found claiming the ownership of 60 maund gold and the ownership of 30 maund gold remains pending. However, 15 kg gold was returned to those who claimed to be the owners following paying taxes at the directive of the court. Some gold was sold through auctions. This article was first published on banglatribune.com