Don’t jump to conclusions
Reports in recent days have suggested that there has been an increase in gold declaration and a reduction in smuggling. But how accurate and factual are these reports?
The increase in gold declarations is a statement of fact. This can be verified. If the government says there has been an increase in declaration, well no one should be disputing this fact because the numbers would confirm this.
It is another thing however to say that there is a reduction in the smuggling of gold. There is not likely to be nay data to verify this.
How does one verify that gold smuggling is on the decline? One way would be to use proxy indicators such as the number of smuggling busts made by the government and the old interdicted from these busts.
The fact of the matter is that there have been no such reports. The fact of the matter is that despite the much vaunted claims of massive gold smuggling, not a single person has been prosecuted to date by the new government for gold smuggling.
It is not rocket science to make these cases. If the Guyanese authorities are in contact with their foreign counterparts, it should be quite easy to determine who imported gold lawfully into other countries of the world.
That information could then be cross-referenced with those who lawfully exported gold.
This situation is made easier because gold can only be exported by the Guyana Gold Board and other licensed dealers, if there are any. Making a case of gold smuggling should not be like solving a calculus equation. It should be quite easy. Yet, no one to date has been charged.
The gold declarations should not be juxtaposed with the belief that there has been a decline in smuggling to arrive at the conclusion that the increase in gold declarations is as a result of the decline in smuggling.
Both positions could be true, that is, there can be both a decline in smuggling and an increase in declarations without the former being responsible for the latter. This is why the media has to be careful about its reporting.
The media has to be very careful with the way it analyses data and the way in which it reports on information provided. The media should be demanding more complete information so as to confirm its initial hunches or analyses.
The increase in gold declarations is to be expected. The first half of last year was characterized by political uncertainty. Investors would have been worried and would have therefore limited their investments. Others may have been hoarding their production as a form of security given the political tensions at the time.
There are more plausible reasons, however, for the increase in declarations. For one, the price of fuel, a major input into the mining industry has declined and this decline could have allowed for increased mining.
The price of gold has increased and the decline in oil prices have allowed miners, this year, to enjoy a more profitable position thereby encouraging production and declaration. But data on increased mining activity, as distinct from merely declaration is not publicly available.
There could also be another important factor. The PPP when it was in office had brought on stream a number of large gold mining companies.
It was only in the second half of last year that two of these big mining operations began to produce gold and this clearly impacted on the increased gold declarations in the second half of last year.
The production from these large mines would clearly, also, impact on the increase for the first quarter of 2015 relative to the corresponding period last year.
Unless there is a more complete reporting on the sources of gold declarations for 2016, it may be too premature at this time to conclude that the increase in declarations is attributable to the decline in smuggling.
It would be interesting if the data is analyzed properly to determine whether the increase in declarations came primarily from the large-scale new mines or from small and medium-scale miners.