Second golden triangle forged

PUBLISHED : Sunday, 28 December, 1997, 12:00am
UPDATED : Sunday, 28 December, 1997, 12:00am

TIMES of turmoil always breed opportunities for someone, it seems. Smugglers are exploiting currency upheavals by illegally shipping gold from Thailand, across Laos and into Vietnam.

Syndicates are earning vast profits by moving more than US$2 million (HK$15.47 million) worth of gold into Vietnam each day, sources close to the trade say.

'There is definitely money to be made with gold at the moment,' one Vietnamese police officer said.

'We have not seen anything like this in years. Illegal gold movements can destabilise things very quickly. We have to be vigilant.' Sources say couriers are ferrying gold bars from Thailand by boat along the Mekong River and on logging trucks through Laos along well-established smuggling routes into central Vietnam.

Some syndicates are now understood to be making so much money they can fly smugglers into Ho Chi Minh City on regular international flights.

The movements are bringing swift changes to the region's smuggling posts and border markets.

Where once the Thai baht was freely traded in exchange for all manner of goods, legal and otherwise, now gold and the US dollar reign supreme once more.

The gold trade appears to be fuelled by a simple case of supply and demand.

Thai goldsmiths are reporting a glut in the commodity, already the victim of flat prices in recent years.

Still-tight foreign exchange policies mean wealthy families must move gold offshore to earn US dollars, which they want to hoard and speculate against a wounded baht.

Legal gold shipments from Thailand have soared in the three months to the end of November, topping US$80 million.

The smuggling trade is at least as big again, Thai goldsmiths estimate.

In Vietnam and Laos it is a different story.

The kip and dong cannot be traded internationally and the first black market in years has developed.

People have lost faith in the value of the two currencies in recent weeks and fear imminent devaluations, sparking demand for the US currency and gold, the movement of which remains strictly controlled by state banking monopolies.

Gold has long had a special appeal in Vietnam.

For decades, average families have hidden their life savings in the form of gold bars in their outwardly austere houses.

Years of turbulence through war and hardline Marxist government had left little faith in banks or paper money - a confidence that was slowly being restored by state bankers in recent years, keen to pull cash back into the system.

That whole process is now under threat once again as the queues form outside the goldsmiths' parlours of Hanoi and Ho Chi Minh City.