Gold smuggling soars in Japan as price rises

Last September, two Chinese nationals arriving from Hong Kong were found hiding a total of some 2.6 kilograms of powdered gold in wigs at Tokyo's Haneda airport.

That's going a bit overboard

There is no limit to the amount of gold that can be imported into Japan, but there is a limit to the amount that can be brought in without declaring it to customs. You must declare to customs if you are bringing in gold bullion that is more than 90% pure and weighs more than 1 kilogram ….this is a lot compared to other countries.

So, if it's not illegal, why all of the "smuggling" name calling? I've seen so many posters with serious policemen warning you against gold imports.

Is it just the import tax?

1Kg of gold is worth today around 14 million yen. 10% tax means 1.4 million yen -market price-. Then you have to cut all of the expenses, fees when purchasing and selling it, plane tickets, to pay the carriers, etc.. not much left after that. Is it worth the risk?

Or, could it be that gold may be cheaper in other countries and they come to cash in the difference? Or gold coming from dubious sources? And that the Japan gold market may be protected by people with the right connections?

Of course, these points shall not be further investigated by the news.

I’ll be selling some this week to invest in other assets.

Gold has been a great way to keep savings intact as the yen has weakened.

Then you have to cut all of the expenses, fees when purchasing and selling it, plane tickets, to pay the carriers, etc.. not much left after that. Is it worth the risk?

Airfare to Hong Kong on an LCC is almost free!

Hardly anyone actually consumes gold, it eventually gets “resold” at best, so the consumption tax doesn’t make sense to me.

According to the customs office and dozens of signs currently posted in the customs areas in Japan’s airports, you must declare any amount of gold or gold products on the basic customs form, “regardless of their quantity, weight, value, or whether they are new or not.” The 1kg, 90% purity rule requires you to fill out an additional “Declaration of Means of Payment” in addition to the basic customs declaration.

You must declare to customs if you are bringing in gold bullion that is more than 90% pure and weighs more than 1 kilogram.

This makes Japan far more restrictive than most countries. Technically, even a gold wedding ring legally ought to be declared. As with many things in Japan, there are the laws, and then there are the rules. Legally, every gold item has to be declared. In their application of the rules, customs officials opt not to arrest every married couple, every businessman with a nice watch, and every fashionable woman with jewelry. But they have the option to if the official in that day decides it’s worth it.

The real questions are a) why is Japan so paranoid about gold flowing into the country, and b) why is it lucrative to smuggle gold into Japan?

Most countries don’t want gold leaving the country. Gold coming in isn’t usually a problem. Is Japan’s currency so precarious that inflow of gold could topple it?

Gold is set at a spot price. I get that people are trying to avoid the consumption tax, but that tax is on top of the spot price. To smuggle it, people have to be getting a cheaper price elsewhere and higher price here. Is Japan setting a domestic spot price for gold higher than the international spot? The only way that smuggling is lucrative is if an artificial imbalance creates opportunity. Gold, being fungible, is only worth smuggling if barriers to trade make it overpriced.