On Laundering Black Money - And Gold?

Bruce Krasting's picture


Switzerland started off the money laundering year with a bang. Three big cases in just a month:


- The Swiss accounts of Sergei Magnitsky have been frozen as a result of an ongoing corruption case in Moscow. This case is interesting as Magnisky died in 2009 (He died in prison - supposedly of natural causes - but he was only 37...)

The Russian's have made this claim:


Prosecutors accuse Magnitsky and his former client, London-based investor William Browder, of a $230 million tax fraud carried out through subsidiaries of Browder’s company, Hermitage Capital Management.


I have no idea what this case is really about (it looks political) but whatever it is, it stinks to high heaven.



-The accounts of Malaysia's Taib clan were frozen after a criminal complaint was filed in Kuala Lumpur. The filing read:


"Taib abused his public office in a spectacular way.”


Of interest (to me) is that the revelations about the Swiss accounts came as the result of a divorce proceeding - an angry ex-wife blew the whistle. The talk is that this mess may top $20B! (link)



- The most embarrassing revelation for the month was the release of information that Luis Barcenas, a Spanish politician implicated in a corruption scandal, had 22m Euros ($30m) stashed in a private Swiss account.



I'm sure that there were many other examples of busted money launderers in Switzerland for the month. They just didn't make the papers. In 2011, 1,500 separate cases were pursued by Swiss authorities. That "bumper year" was due to the Arab Spring, and all the hot money from N. Africa that got exposed. Things have probably slowed down in 2013 - So now what is it down to? 50 a month??


This business of black accounts, crooked money and crooked bankers fascinates me. How big a problem is this? I don't think anyone really knows the answer to that. The fact is, it's huge, and it's growing. The following data is from 2010. Even if it is only partially correct, the implications are staggering:


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What? $700B in one year! From only 10 countries! China is how big in this dirt pile?


$700B is a very big number, it is larger than the GDP of Saudi Arabia (or Switzerland), it is equal to the GDP of Indonesia (Pop =240,000,000), it is twice the size of the GDP of Michigan. And this is only from a small group of countries. The industrial countries must be adding huge bucks to the dirty-money list.


I got some input on this topic that might be of interest to gold bugs. I'm not certain of this info, so be guided accordingly. The email reads (in part):


There is a trend developing in the last two years where those with flight capital are trying to launder gold. For example gold is being smuggled out of Venezuela sent to Curacao where the exporter will create documents that he bought it from a country like Peru. It then goes on to a refinery in Switzerland or Dubai and those proceeds or sometimes the refined product are then deposited for the client.

Another example is Dominican Republic which has an usually large outbound flow of mined gold. The reason is similar, raw gold from Venezuela as well as from Africa comes to DR gets washed through a legitimate mining operation and then sent on to a refinery.


Again, I can't confirm any of that, but on the broader question of whether gold is now playing an increasing role in money laundering, I'm certain that it is.


Another comparison on the magnitude of global money laundering is that $700B is 3Xs the value of all of the gold in Ft Knox (valued at 1650).


On one hand you might conclude that the effort to snuff out dirty money in banks is going to be a constant source of new demand for gold. And you would be right in that conclusion. But on the other hand, if gold is going to be where hot money goes, how far away can it be where private ownership is restricted?


There is another side to this. Assume that there is already a large ownership of physical gold by the dirty money crowd (There is). Assume further that this ownership trend is increasing as global banks get squeezed by money laundering investigations and fines (think HSBC). Do the "deciders" in the globe want to enrich those that are now parking hot money in gold? "No" is the answer. This set-up is another reason why suppressing the price of gold would be "helpful". It certainly argues against gold backed money. That would make the bad guys rich.


Black Money

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MSimon's picture

"Catherine Austin Fitts Narco Dollars"

tip e. canoe's picture

cheers bruce and the gang, we've opened both a chest of gems and a can of worms with this one ;~)

Gamma735's picture

There was a rich man, who was clothed in purple and fine linen and who feasted sumptuously every day. And at his gate lay a poor man named Laz'arus, full of sores, who desired to be fed with what fell from the rich man's table; moreover the dogs came and licked his sores.  The poor man died and was carried by the angels to Abraham's bosom. The rich man also died and was buried; and in Hades, being in torment, he lifted up his eyes, and saw Abraham far off and Laz'arus in his bosom. And he called out, `Father Abraham, have mercy upon me, and send Laz'arus to dip the end of his finger in water and cool my tongue; for I am in anguish in this flame.'  But Abraham said, `Son, remember that you in your lifetime received your good things, and Laz'arus in like manner evil things; but now he is comforted here, and you are in anguish.  And besides all this, between us and you a great chasm has been fixed, in order that those who would pass from here to you may not be able, and none may cross from there to us.' And he said, `Then I beg you, father, to send him to my father's house,  for I have five brothers, so that he may warn them, lest they also come into this place of torment.'  But Abraham said, `They have Moses and the prophets; let them hear them.'  And he said, `No, father Abraham; but if some one goes to them from the dead, they will repent.'  He said to him, `If they do not hear Moses and the prophets, neither will they be convinced if some one should rise from the dead.'"


To me it sounds like Buffet and Soros will be going to hell.

CH1's picture

Who decides which money is "black"?

Please don't tell me it's a guv agency.

paint it red call it hell's picture

"That would make the bad guys rich."

The bad guys are already beyond rich, never room for the noveau at the top I suppose...

Widowmaker's picture

Krasting should title this article,"How to act coy."

Dirty money is more pervasive than clean, that's how much.

Fiat is totally corrupt the world over (accelerated dramatically starting in the 1960s).  If that is not the definition of systemic risk then systemic risk has no rational definition.

Mexicans have been loading up / laundering thru silver for years.  Where's the USA?  Hung out to dry by the Federal Terrorism Reserve.  Lanny Breuer would be a shoe in for the next Fed-fuckup job.

Now we'll give Mexicans citizenship... BECAUSE WE WANT THEIR SILVER!

WhiteNight123129's picture

Whether or not the guys who think they control things (which they do not) want to make the Gold price go up or down because it held by good/bad guys is irrelevant. Micromanagement does not work.

Here is another attempt on Silver embargo again in China in 1927 which failed miserably.



WTFx10's picture

Its a Gamplan


"All the world suffers from the usury of the Predators, their monopolies and deceit. They have brought many unfortunate people into a state of poverty, especially the farmers, working class people and the very poor.
Then as now Predators have to be reminded intermittently anew that they were enjoying rights in any country since they left Palestine and the Arabian desert, and subsequently their ethical and moral doctrines as well as their deeds rightly deserve to be exposed to criticism in whatever country they happen to live."


Moe Howard's picture

Current Pope appears to be a Marrano. He has come out publicly for a real World Bank and World Government as "THE ANSWER" to the world's problems.

WTFx10's picture

Its a Gamplan

H. H. BEAMISH, in New York Speech, October 30, 1937

"The Boer War occurred 37 years ago. Boer means farmer. Many criticized a great power like Britain for trying to wipe out the Boers. Upon making inquiry, I found all the gold and diamond mines of South Africa were owned by Predators; that Rothschild controlled gold; Samuels controlled silver, Baum controlled other mining, and Moses controlled base metals. Anything these people touch they inevitably pollute."

W. HUGHES, Premier of Australia, Saturday Evening Post, June 19, 1919

"The Montefiores have taken Australia for their own, and there is not a gold field or a sheep run from Tasmania to New South Wales that does not pay them a heavy tribute. They are the real owners of the antipodean continent. What is the good of our being a wealthy nation, if the wealth is all in the hands of German Predators?"

MSimon's picture

"Anything these people touch they inevitably pollute.""


Don't buy their stuff.

ebworthen's picture

Think further; this could be the opening salvo in the "outlaw gold transactions of any kind to stop crime" meme.

The biggest crooks in the entire world are on Wall Street and in Washington.  They will do anything they can to suppress real money (sound money, tangible money, non-fiat, non-digitally trackable money).

No doubt the smaller players and tin-pot dictators and Jon Corzine wannabees are putting dirty money into gold, however, this is not the real problem. 

The real problem is the FED and the complete loss of any semblence of free markets, rule-of-law, sound money; with Wall Street and Washington colluding to gradually debase currencies, savings, the middle class, and eventually collapse the world economies to enrich the elites via debt serfdom for the masses wrapped in the flag of "freedom" and "democracy".

There will be slogans, commercials, public service announcements, leaflets, committee meetings, town halls, marches; all in the name of "safety" scrambled with "freedom" and patriotic drivel propaganda while the West descends into fascist police state kleptoligarchies complete with swipe only digital money, identification cards ("show us your papers!"), and cameras on every corner.

Bear's picture

It's nice to know where the money did go .... but better to know where the money will go:


Bear's picture

I thought Costa Rica was the place to go ... and people are bailing with their money; excluding Saudi, it has the largest per capita withdrawal.

silverdragon's picture

One key reason money left China was Chinese entrepreneurs getting it out and then setting up a foreign company in China and bringing it back in via registered capital to get better tax benefits. Not sure how this would f*ck up the FDI data and the "Top exporters of Illegal Money" nonesense data. Oh wait up, it would totally fuck up all the data!

I mean really, how the f*ck does anyone calculate "hot money" flows out of China. If the fools at Financial Global Integrity Report had two brain cells to rub together and actually understood half the ways it flows out they wouldn't publish their nonesense report.

Every man and his dog has some nonesense perspective on China and some dodgy report based on what the the tooth fairy and father xmas told them in a dream, all for sale.

dunce's picture

All flight capital is not dirty money, most of it is protecting it from corrupt politicians. The politicians make laws to confiscate wealth thus making their theft technically legal and all efforts to evade their greedy grasp criminal. Making broad general accusations of "good guys" and " bad guys" is reckless and presumptuous. One must be careful of assuming that all large accumulation s on wealth are stolen , extorted, or obtained by some sort of immorality as that is pure socialist nonsense and lies.

deerhunter's picture

Just wondering out of lack of knowledge the comments about a mining company having to register gold?  Isn't gold just sold on the open market like any other commodity when first introduced to that market?  What reason would there be to have to market new gold in a country different from production source?  Just wondering?

smartstrike's picture

The Swiss gave us cheese with holes in it, watches, clocks and safe place where criminals could keep their global loot.

All Risk No Reward's picture

Netflix "Black Money"

Debt Money Tyranny

The Shadows of Power: The Council on Foreign Relations and the American Decline


Never One Roach's picture

Excellent article, Bruce. It does make you wonder why the Swiss are always so happy when there is global turmoil.....b/c this tends to move more money into their vaults, stashed away, I suppose.

riphowardkatz's picture

the bad guys are rich.

newengland's picture

Interesting numbers, but I think the conclusion is incorrect.

FX is the world's biggest market. Most 'money' is digital. The major players manipulate all markets, and run to Switzerland when they are afraid or choose to reside there;  they can pull the strings, away from tedious provincial rules elsewhere. The Swiss have the highest private gun ownership in the world as well.

Worldwide money laundering or stolen gold is  a result of the globalist regime, and puny compared to the trillions skimmed off by usurious banks, and their friends in governments who post profits offshore...much like CONgress, and other paid political pets.

HSBC got away with its money laundering for many years. It was useful for the global financial system...until it was not, and we'll probably never hear why HSBC was finally no longer a convenient partner for its friends in the USA, Britain and Europe.

Why would they confiscate gold when their globalist agenda needs the free flow of people, goods, services and gold in order to build that 'new world order' that freak former Prime Mentalist Gordon Brown speaks of so highly.

Yep. That Gordon the Moron who announced that he was going to sell off Britain's gold, and the price plummeted, cheating Britons, but rewarding the freak globalist bank cartel. His boss Blair was later employed and still serves JP Morgue, the 'Joker', manipulator in chief for its hidden hands...tucked up in Switzerland, probably.

Gold confiscation is impossible. Taxing it out of the hands of ordinary people might happen, but by then, the powers that be will be so hated that their laws will mean nothing. We can see their lies, theft and endless war that profits only their chosen banks and chosen politicians.

2013: lucky for many. Unlucky for some.

Orly's picture


Get that Brit a beaker o'bitter!

malek's picture

Bruce, define money laundering before generously attaching that term to all kinds of things.

Bruce Krasting's picture

What do I look like, Webster's dictionary?

Money gotten from illegal sources. Gun running. Drug running. Sex slaves. Pirates. Bank robbers. Extortionists. Insider traders. Murderers. Crooked politicians. Crooked Generals. Smugglers. Thieves. Blood diamonds. Got the picture?


This money is laundered in a way that it can be used. Investments, homes, cars, boats etc. You can't buy these things with suitcases of cash.


Not only is this money stolen from someone's purse, it is never taxed. So the theft is really double.


Will that work as a definition? Am I missing something?

malek's picture

Don't play dumb.

Is money gotten from allegedly illegal means (maybe even on grounds of a newly made up law for that purpose) and put into a Swiss bank account already laundered money?

Is money assumed earned honestly and put into a Swiss bank account and not paying taxes (in country of residence) on miniscule interest gained all laundered money?

Is money assumed earned honestly and freshly put into a Swiss bank account expected to become almost guaranteed laundered money, because which foreigner would put money in a Swiss bank account if he doesn't have any nefarious intentions?

mind_imminst's picture

And this is still puny compared to how the central bankers are ripping off the world through inflation.

Widowmaker's picture

"Pay no attention to the man behind the curtain."


ebworthen's picture

So if they can't buy stuff with suitcases of cash, they open an account at J.P. Morgan Chase, Citi, Wells Fargo, or Citi with "special" interest rates, right?

kevinearick's picture

have you looked at RE on the margin?

meghaljani's picture

I am surprised India is not in the list. 

Yen Cross's picture

 Bruce, I think you have good intentions.   You are on the "TEET", and you know it!

lindaamick's picture

I view gold as the last ace in the hole or maybe a trick to pull out of the hat in the case that all this money printing does not yield the desired outcomes.  Desired outcomes are maintenance of the status quo. 

One trouble with the money printing is asset prices will rise to levels unbelievable if something is not done.  More assets are required.  War manages that issue in a couple of ways.  It creates a host of perishable goods that are destroyed readily to create the need for more and the booty grabbed from the occupied country presents more assets.  

The gold wars are uncover now with China building infrastructure in African, SA and ME countries spending USD and receiving payments in gold.  The west can't have that.  If China builds a sufficiently large stash of gold the yuan COULD challenge the USD reserve status if enough investors begin to doubt US hegemony.  

The US has to keep the biggest gold stash.  It could be that it will be needed to back the USD in cases where the current process no longer works to maintain the status quo.  

For now, it benefits the players to keep the gold price down, down down.

jomama's picture

i can't keep track of what's legal and what isn't anymore?  

why not just legalize all forms of income?

it's not like anyone is going to jail for current 'illegal' forms of income!

Widowmaker's picture

What is "jail?"

You must be a poor dope smoker to know silly words like that.

BlackVoid's picture


The "good guys" also have their money in gold. They just want more before it all explodes.

Herdee's picture

You forgot the money laundering operations of the CIA.Put China in position #2. China can't touch the illegal money made off of Cocaine and Heroin,not by a long shot.

plata pura's picture

that be like a pop corn fart in a typhoon compared to what greenspan blackmailed clinton over;;;and silence/dismantle brooksley bjorns regulatory groupo.

fourchan's picture

ah the clinton, barry seal, ollie north, seacourt years, with a sound track by rodger clintons band dealers high.


since they got away with all that at we the peoples expence i can only imagine its 100x worse now.

Orly's picture

How can you forget Hassenfus flying out of Mena?

Acidtest Dummy's picture

Clawing back ill gotten gains may be impossible once they have sunk to the bottom of a lake, but it is not the first business in order. First, the WAR CRIMINALS must be held to account. They will not be able to enjoy their loot while cooling their heels in Spandau. And if we cannot follow the looters back to their loot, at least they will not get to spend it. Anyway, when the WAR CRIMINALS are in the dock they are likely to sing, to tell what little they know about their bankster friends criminal activities.

Nassim's picture

There is nothing new here and the numbers are grossly underestimated.

In the book "Capitalism's Achilles Heel: Dirty Money and How to Renew the Free-Market System" - which was written back in 2005 - the author estimated that one trillion dollars were leaving Africa each year. Yes, Africa alone. Today, that figure is probably two trillion dollars.



If you want to know some tricks about how money is laundered within the USA - no need to smuggle gold to Curaçao, read the book "Black Money"


Bear's picture

It all ends up in the US ... then the FED prints money to send to foreign banks so they can skim to drug money, which lands back in the US in different hands.

I can't believe how much the US taxpayers (next generation of Americans) are paying for the global shit-cycle.

newengland's picture


You are right...up to a point. Then there is the grotesque pillaging of Africa and the Middle East by its own rulers, and the oligarchs of the former Soviet Union do the same. Their socialist and communist 'ideal' didn't stop them from abusing the majority.

'Power corrupts, and absolute power corrupts absolutely.'

Nassim's picture

You are also correct up to a point.

These guys do pillage their own countries, but guess where they put their money. Periodically these guys get ripped off à la Ghaddafi / Saddam / Shah of Iran / Mubarak / Abacha / Mobutu etc. and their money disappears and never sees the light of day again. Essentially, the West gets to keep their oil / gold / ivory / gas for free.

steve from virginia's picture




Good grief, there is no such thing as a virtuous 'rich dude'. The rich are evil: wrong doing and theft from others is the way weath is gained in the first place!


Hello, Krasting! What planet are you on?


In a just world the rich are tortured horribly then put to death,


To be a thief for more than the briefest period one must be a successful thief. Any criminal will tell you it is better to steal $10 billion than pilfer $10. @ $10b you are treated as a respected member of the community and looked up to.







booboo's picture

Ahh, to be 16 again. Care free, dumb as a box of hammers and living at home. Whats it like now that the parents have TWO cars?

Peter Pan's picture

I remember reading a piece ( I think in a book called Freakeconomics) about a New Yorker who supplied bagels for many many years to New York Office towers. People would leave the money and take a bagel. Ths man kept accurate records for many many years and what did they show? Most of the unpaid bagels were on the floors where higher management were located.

I guess enough is never enough even when it comes to bagels.

Moe Howard's picture

I had an office in a building mostly inhabited by multi-millionaire brokers most of which were of a certain tribe, but not all. I was not in the same league financially to make that crystal clear.

This was in the middle 1970s.

I had a big 40 cup type percolator and the secretary would stop and get a couple of dozen bakery donuts and pastries every day.

We had a ceramic piggie bank [a bear] so that those who took coffee and or a donut could contribute to the cost.

Things were so bad - how little they gave - that the secretary started emptying the bear after each person left.

A general rule - the richer the less they left. In fact, some of the richest left buttons! Only because it made a sound when they dropped it in.

Mostly we got pennies and the occasional dime. Rarely a quarter, that would be from the custodial staff or a secretary.

As I couldn't offend any of these people [they mostly were customers of mine] I got rid of the piggy bank.

It was a lesson, however.