3 Israelis on trial for smuggling gold in Hong Kong

As ‘salt of the earth’ trio awaits sentencing, local Jewish community expresses concern both for welfare of detainees, image of Jewish businesses

Three young Israelis are imprisoned in Hong Kong, awaiting their sentences for allegedly trying to smuggle out some 342 kilos (754 pounds) of gold from the China-controlled island.

In addition to multiple gold barrels, during the arrest of Yoav Chen, Daniel Fadlon and Omer Gavish police found four five-carat diamonds in their possession. While the former two have owned up to the counts of smuggling last week in hope to reduce their sentences, Gavish pleaded innocence before the court of law.

The hearings ended last week, and now the three are awaiting their sentences, which are expected to be announced in a week or two. Maximum punishment for attempted smuggling in Hong Kong can reach life sentence and even capital punishment, although either is extremely unlikely in this case.

Hong Kong has abolished capital punishment in 1993; however some cases, including smugglers, are redirected to China, the world’s most prolific practitioner of execution, due to overload of the legal system.

“He’s a good boy, real ‘salt of the earth,’ he has nothing to be ashamed of,” Gavish’s mother Dalia, a resident of a kibbutz in northern Israel told Yedioth Ahronoth. “He’s just a pawn in the whole business. He worked in naval security after finishing his military service, he travelled a lot. Then someone offered him a job as a security guard in Hong Kong about a year ago. He went there and got himself mixed up in that unsavory affair.”

Dalia Gavish added she visited her son in prison, where he was in good health and optimistic regarding his acquittal.

The three Israelis were arrested after local authorities noticed the suspiciously high frequency of their comings and goings in and out of Hong Kong.

In the last few days rumors were afoot among the local Jewish community – which, standing at some 5,000 is the largest in Asia – that the three were smuggling more than just barrels of gold, namely both light and hard drugs.

“It sounds like a sad story of three good kids, salt of the earth, graduates of select combat units, which felt into a trap set by a drug baron,” a source in the community said Saturday.

“We are hoping for the sake of these kids and their families that the authorities let them return to Israel, though, based on past precedents, this system shows no mercy. We are hoping this story doesn’t stain the whole community, as many of the Jewish businesses here are based around diamonds.”3

Source: http://theuglytruth.wordpress.com/2013/05/26/3-israelis-on-trial-for-smuggling-gold-in-hong-kong/

The geopolitics of gold

Western central banks have got themselves horribly wrong-footed as a result of not adjusting their anti-gold policies to allow for the realities of Asian gold demand. Though their dealings are shrouded in secrecy, there is compelling evidence that much – if not most – of Western central bank gold has been quietly sold over the last three decades.

More recently all members of the Shanghai Cooperation Organisation, a common security and trading bloc led by Russia and China and incorporating the bulk of Asia’s land mass, have been accumulating gold. Between current SCO and future members (India, Iran, Afghanistan, Mongolia, Belarus and Sri Lanka), with their citizens numbering over 3 billion people, they have together cornered the global market for physical supply, without even taking account of demand from the rest of South East Asia’s gold-hungry population.

The result is that gold markets are now failing to clear. The outcome is a choice: the West will either have to stop intervening and allow gold to find a level where physical and derivative markets interact properly with each other, or capital markets in the West will face a growing crisis likely to spill over into other markets. While these outcomes were always going to be a choice to be made at some time in the future, the disconnection between physical gold and derivatives has become so great that it is now an immediate concern.

At the government level it is a geopolitical clash of the titans. Russia and China are almost certainly aware of the lack of gold in Western central bank vaults: they are fully capable of thorough due-diligence in this respect. They have so far been careful not to disrupt capital markets because it has not been in their interests to do so; however, the current hiatus in gold markets is almost certain to modify their view.

Fundamental to all this is their attitude to Western currencies: the yen is now collapsing, the euro area is in deep trouble and the US economy is at very best stagnating. Until now, payment for Russian energy and Chinese goods in foreign currencies has been welcomed, because it has allowed the Russian and Chinese elites and middle classes to accumulate wealth. This balance of interests can only be maintained for so long as Russian and Chinese governments and their citizens can hedge foreign currency risks through an offsetting accumulation of foreign-owned gold.

This is no longer the case, because to all intents and purposes western capital markets are cleaned out of physical supplies, and the ability of the Western central banks to supress gold prices appears to be ending. And with the West’s financial system no longer able to deliver their most prized commodity, hitherto passive attitudes in Asia to Western currencies are likely to be reassessed.

The gold question has become central to east-west trade. The sensible approach for Western central banks is to defuse the problems arising by taking positive steps to ensure that gold markets operate properly. This is conceptually difficult, because the most likely result, a higher gold price, would risk undermining confidence in the major currencies and most probably damage the bullion banks in London.

Source: http://www.goldmoney.com/gold-research/alasdair-macleod/the-geopolitics-of-gold.html

Detour Gold returns to the market

For about three and a half years ended mid-2012, Detour Gold Corp. could do no wrong in the eyes of its employees who were beavering away on building what is slated to be the country’s largest gold mine located in northeastern Ontario.

Detour’s investors were also more than happy over the same time period as their investments continued to grow in value.

And so were the investment bankers who during that period, helped the company continue to finance at higher prices: from $12.10 a share for an equity issue in mid-2009, it subsequently raised capital at $14.25 (October 2009); $24 (June 2010); $29.75 (July 2011); $28 (January 2012) and $26.50 (November 2012)

Then came the end of the commodity boom, or talk about the end of the commodity boom, the free fall in the price of gold – and the hard times for its owners. The workers are still beavering away.

The stock has since fallen to levels not seen since late 2008.

On Tuesday Detour Gold returned to the market with a $153-million offering via the sale of 17.5 million shares a $8.75 a share.

At $8.75 the shares were priced at a healthy discount to the then trading price of $9.23. The financing was organized a few days after the stock hit a six-month low.

In a release, Detour said that it “intends to use the net proceeds of the offering for working capital during the ramp-up of the Detour Lake mine and for general corporate purposes.”

Similar language was used in early January when Detour raised $113.95-million. Back then Detour said that “the company intends to use the net proceeds of the offering for working capital during the ramp-up of the Detour Lake mine and for general corporate purposes.”

Between that financing and Tuesday’s, Detour also closed a $135-million senior secured credit facility made up of a $90-million revolver and a $45-million letter of credit facility. At the time, Detour said that the facility is “for a tenor of three years and is available for working capital during the ramp-up period, financial assurance and general corporate purposes.”

Accordingly about $400-million has been raised for activities all of which include the ramp-up period.

Source: http://business.financialpost.com/2013/05/21/detour-gold-returns-to-the-market/