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  Russian gold reserves are thought to be enormous. In 1934, Russian officials put the figure at 3,500 tonnes. Geologic reserves are also considerable.

  China produces perhaps 50 tonnes a year, the third biggest gold producer in the world, on par with Canada.

  In 1976, it was estimated that perhaps 300 tonnes of gold were sold from communist countries, including 80 tonnes from China.

  In 1980, it was reported that China intended to develop three gold mines with estimated reserves of 200 tons of gold in east China’s Shandong province. American and Canadian companies were to help.

  Although the British economist J.M. Keynes called gold a ‘barbarous relic’, ordinary people the world over (as well as many bankers), still see gold as a sheet anchor against devaluations, insecure currencies and the hazards of war.

  It is estimated that throughout history, between 80,000 to 90,000 tonnes of gold have been mined, slightly less than half of which is held in official monetary stocks either by central banks, the International Monetary Fund (IMF) or the Bank for International Settlement. The USA is believed to have 8,500 tonnes, IMF 5,000 tonnes, West Germany 3,650 tonnes and France over 3,000 tonnes. The rest exists in the form of jewellery or contained in commercial products or forms part of the large private stock of bullion held for investment purposes. Investment gold in private hands is estimated to be around 20,000 tonnes. Much of the private gold in France (one-fourth of the world’s privately owned gold stock of $15 billion) is reputed to be buried in gardens, hidden under mattresses or in clothes closets, while 4,000 tonnes of gold are believed to have been converted into jewellery in India, much of it illicitly.

  Many Vietnamese refugees in the 1970s escaped with enough gold to establish a new life in America. It would be difficult to persuade the boat people that they were wrong to abandon the now worthless South Vietnamese piastre.

  India has been described as the ‘eternal sink of gold’. Indians venerate gold as a sacred symbol of the Indian goddess of wealth and treat it as an essential ingredient in almost every social ritual. A child is given gold at its birth and the bride receives gold as her personal property when she gets married. As a status symbol, gold has no rivals. Most of all, gold is valued in India, as elsewhere, as a sure hedge against inflation. Gold has become an indispensable possession for every Indian family. Even the poorest hoard it. India has little gold of its own and since 1947, the government has banned all gold imports. At once, the gold smugglers moved in. Dubai, on the Persian Gulf, has become one of the most important gold trading centres in the world regularly used by smugglers shipping millions of dollars worth of gold bars from Europe to India and Pakistan. Dubai imported 259 tons of gold in 1970: only a fraction of that remained in Dubai, the rest was quickly exported. The smugglers’ launches are indistinguishable from thousands of genuine fishing boats operating off India’s immensely long and open coastline.

  Among the oldest pieces of gold jewellery is the funeral mask of Tutankhamen (1400 bce). It was discovered by Howard Carter in 1922. It is now in Cairo Museum with many other fabulous gold items.

  Among the most renowned, modern pieces of gold jewellery is the Prince of Wales’ investiture crown. It is of solid 22-carat gold. Originally, it was hoped to have it made entirely of Welsh gold but there was not sufficient available.

  As part of a campaign to eliminate gold’s official monetary role, the International Monetary Fund in September 1975 abolished the official price of gold, and decided to dispose of one-third of its stock. Half this amount would be returned to member countries in proportion to their IMF quotas, the rest to be sold on the free market. The difference between the official price, US$42.22 per ounce, and the price at which the gold was sold would be used for the benefit of developing countries.

  At the first auction in 1976, the IMF sold 121 tonnes of gold. After early unease and some drastic price weakness, the market absorbed the IMF supplies with some equanimity.

  In 1976, USA produced 32 tonnes of gold—3.2 per cent of the free world’s gold output that year. USA is the world’s largest industrial market for gold, absorbing between 10–20 per cent of the world’s supply.

  In 1975, American citizens were allowed to buy gold coins.

  An American news agency report from London in 1980 quoted Hill Samuel’s gold expert, Julian Philips, as saying that Saudi Arabia planned to build up its gold reserves to US$8.8 billion by the end of 1980 and then by a further $3.05 billion a year. According to him the first purchases, totalling 3,000 tons, took place between 15 July and 12 September 1979. Most of these purchases probably came from the Soviet Union.

  William Rees-Mogg, editor of The Times, is among those who firmly believe in gold. He argues that in circumstances of instability, the attraction of gold as an investment is greatly increased. Gold has a unique combination of qualities. It is a real asset in the same way as other commodities, or land, or buildings, are real assets. It does not depend for its value on credit or on estimates of its future earning power. Gold is at the same time a liquid asset. It is possible in almost all circumstances to change gold into money or into other kinds of money, at an hour’s notice; and in extreme circumstances, gold can be used to purchase other goods when money is not acceptable. Gold is, therefore, the only investment which is almost 100 per cent real and almost 100 per cent liquid.

  The classical argument against gold as an investment is that it does not produce any income. In a period of price stability this is a serious argument for confining investment in gold to a small proportion of the total assets of an individual or of the reserves of a nation.

  Gold, insists Rees-Mogg, is the only investment which has the virtues of cash and the virtues of reality.

  M.S. Mendelsohn, a British economist, is an opponent of gold. He points out that the use of gold as money went through four important stages. The first, lasting about 2,000 years to the late 17th century, was the era of the king’s money. Citizens brought the precious metal to licensed moneyers who minted it, kept a small charge for themselves and passed on seigneurage to the king for the use of the royal dies which gave the coins their face value. The second and most renowned phase was the full gold standard which prevailed in Britain during the century to 1914, and in the wider world for the past forty years of that period. Official mints coined all gold brought to them free of charge; all paper currency was convertible into gold at face value; and the full freedom to import and export gold, which was an essential part of the system, provided equilibrium between countries, though less automatically in practice than in theory as it was customary for national banks to cheat by borrowing gold from each other whenever a drain threatened unduly harsh repercussions.

  Britain’s brief and notorious return to gold from 1925 to 1931 was a return only to a modified standard known as the bullion standard under which convertibility was limited to standard 400-ounce bars (meaning that it was limited to the rich). This was accompanied by a first experiment with the gold exchange standard under which national currencies were no longer directly convertible to gold for international settlements, but only through the medium of certain key currencies. After the war, this became the basis of the Bretton Woods system under which foreign exchange holdings were convertible into gold only through the dollar.

  General de Gaulle referred to gold in 1965, ‘which’ he said, ‘does not change in nature, which has no nationality, which is eternally and universally accepted as the unalterable fiduciary value par excellence’. “History,” says Mendelsohn, “contradicts these sentiments in every particular.” It is for a start by no means true that gold enjoyed unbroken historical primacy. For over a thousand years, to the late 13th century, Europe relied mainly on silver and for the next 500 years there was continuous rivalry between silver and gold. At the end of that period Britain became the first to start drifting into a gold standard largely because the Indian trade was draining it of silver. The use of precious metals did not ensure the stability of money. Kings commonly debased the currency
by ‘crying up’ the face value of coins and by other means, usually to finance state expenditures, but sometimes to meet the demand for more liquidity to finance the growth of trade. Henry VIII, for example, devalued the English currency by no less than 60 per cent in seven years. Medieval and renaissance Europe was a crazy quilt of fluctuating currencies; 15th century Germany had about 600, and every important Italian city had its own. There was constant arbitrage between currencies and between gold and silver, ineffectually countered by controls on trade and bullion shipments. Contracts came to be expressed in European units of account, like today’s SDRs and privileged landlords like Oxford colleges won the right to insert commodity clauses into their leases. So much for gold’s eternal verities!

  The age of the full gold standard in Britain was extremely brief and it was shorter still in the rest of the world. During the 19th century, world output expanded as never before, mostly accompanied by falling prices. Productivity increased rapidly in this early stage of industrialization, government expenditures (and services) were minimal, the resources of new continents lay open to Europe’s surplus population, labour was docile and so were commodity producers. These circumstances were not the result of the gold standard—they were the circumstances that allowed the gold standard to work. When these circumstances ceased to exist the gold standard was abandoned, never to be tried again.

  Finally, a word by Mendelsohn about the importance still attached to gold as a strategic reserve by defence ministries more than by finance ministries. The evidence, he says, does not show that gold has been particularly helpful in modern war. Britain financed only three per cent of its net foreign purchases by the sale of gold during the Second World War, fighting mainly on credit. Russia similarly fought mainly on credit and aid, while Germany found the real resources of occupied countries more useful than their bullion. The larger powers did not need gold and Czechoslovakia provides the classic illustration of its futility for a small power. In 1938, that country’s gold stock was transferred for safe-keeping to the Bank of International Settlements, which lodged it in the Bank of England. The following year, Hitler was recognised as the ‘Protector of Czechoslovakia’ and the Czech gold was transferred to the Reichsbank. After the war, it was ‘returned’ to the Czech government which in 1975 was still trying to get the money out of the vaults of the New York Federal Reserve Bank, where most of the world’s gold is stored (not at Fort Knox).

  In 1979, Singapore was the sixth largest importer of gold in the world market. Of an estimated total supply of 1,835 tons, the Republic absorbed 65 tons, or nearly four per cent. Working on an average price of about US$307 an ounce, the approximate value of 2.1 million ounces comes to about US$650 million.

  These figures were published in the review of the bullion market by Samuel Montagu and Co. of London. The review said that in the Far East in 1979 demand was 285 tons, about 75 tons higher than 1978. The three most important markets were Japan, Hong Kong and Singapore. Hong Kong merchants imported twice as much as they did in 1978 and most of it was thought to have found its way to Taiwan, where there is a lot of hoarding. The report also said that in Southeast Asia there were significant imports into Singapore from Europe. Out of the 65 tons about 13 tons remained in Singapore. A significant proportion of this gold moved to Indonesia, but during the second half of the year considerable re-flows from Indonesia were noted.

  Total production of gold in 1979 was estimated at 961 tonnes. USSR sales were estimated at 240 tonnes.

  Estimating world gold supply is very much a guessing game. Michael Brown, the chief economist at South Africa’s powerful Chamber of Mines, expected global gold supply to the markets to fall to 1,650 tonnes in 1980 compared to his estimated 1979 total of 1,750 tonnes. This view was based largely on a possible further cut in Soviet sales and cuts in official sales by monetary authorities, such as the United States Treasury. The South African mines were unlikely to produce much above 700 tonnes in 1980. All bullion sales to world markets are handled by the South African central bank. The companies can market Krugerrand gold coins up to a volume of one-third of total gold output. A record 6,012,293 Krugerrands were sold in 1978 (192 tons of gold). In 1979, the Russians were thought to have collected US$2,000 million from gold sales.

  World output of gold reached its peak in 1970 when a total of 1,639 tonnes were produced. South Africa remains by far the leader of the gold producers, although its pre-eminent position is being eroded by Russia which has expanded its output dramatically with the help of a huge seam at Muruntau in Western Uzbekistan. In 1970, South Africa’s gold production reached 1,000 tonnes, accounting for 60 per cent of total world output of 1,639 tonnes.

  For 35 years from 1934, the price of gold had been fixed at US$35 per ounce. During the next decade, the price of gold increased nearly ten-fold. In August 1971, dollar interchange-ability halted.

  Since 1666, the world’s most important gold market has been London. Most of the world’s gold is handled by the London and Zurich gold markets. Canadian and American gold is absorbed within the Americas, and Australia’s output is either used at home or sold to Hong Kong or Singapore.

  In January 1980, the price of gold crashed through the US$600 per ounce barrier. The Soviet Union was reckoned to have become about US$18,000 million richer as a consequence. One report said that although the scale of Soviet gold production and the size of Soviet gold stocks are closely guarded secrets, the USSR was believed to have reserves of gold amounting to 3,000 tonnes. The USA’s gold hoard was thought to be more than 8,000 tonnes; in January 1980 it was worth US$190 billion.

  Ngo, the Singapore gold smuggler, was murdered in 1971. Seven of the nine men responsible for his death, and the death of his assistants, were hanged in February 1975. By an odd twist of fate, they were to die more than two years after gold smuggling from Singapore had ceased to be a lucrative if dangerous illegal occupation. On 14 August 1973, while the condemned men were still in jail awaiting the verdict of the Court of Appeal, the Singapore Government, for economic reasons, decreed that henceforth anyone could freely move gold into and out of Singapore.

  On 8 March 1974, the Singapore police detained a young foreigner who arrived in a motor boat at Clifford Pier carrying forty gold bars worth $560,000. He had ten bars stuffed in his shirt. Another 30 were found in his suitcase. Three policemen stopped him as he stepped out of the boat. They became suspicious when they saw him walking awkwardly. They searched him and found the gold. He was led away to the nearest police station where he was promptly released and the gold returned to him. It is no longer an offence to bring gold into Singapore—even if it is gold smuggled out from other countries. Each country must look after its own smugglers!

  In 1977, a Penang businessman, Pang Piow Kan alias Boh Piow Kan, was fined $1 million (in default three years jail) for trying to smuggle 40 one-kilogram bars of gold (valued at nearly $550,000) into Malaysia. The gold was forfeited. He was caught in a customs ambush near the Causeway. Somebody had tipped them off. The gold was found hidden under the floorboards of his Volvo.

  In nearby Indonesia, gold smuggling still goes on. Customs officials at Jakarta airport in January 1980 seized about 54 kilograms of gold worth SGD$3 million packed in condoms to be smuggled out to Singapore. Two smugglers were arrested.

  The Inquiry

  IN SINGAPORE, AS IN OTHER COUNTRIES, when murder is suspected, a judicial inquiry is held to determine whether the accused has a case to answer. The inquiry into the death of Ngo Cheng Poh, and his two employees, took nine days. It was held in the Fourth District Court before the magistrate, Mr F.G. Remedios. The prosecutor was Mr S. Rajendran, Senior State Counsel. He argued the police case presented by the Investigating Officer, Superintendent Chia Quee Kee, assisted by Detective Inspector Oh Chye Bee. The former Chief State Counsel, Mr Francis T. Seow, now in private practice, appeared for the two brothers. Mr N.C. Goho represented Richard James, Stephen Francis and Konesekaram Nagalingam. Mr G. Gopalan appeared for Peter Lim Swee Guan, and
Mr Leo Fernando defended Alex Yau Hean Thye. Mr John Tan appeared for Stephen Lee Hock Khoon. Singapore’s leading criminal lawyer, Mr David Marshall (who became Singapore’s Ambassador to France when he retired from the Bar in 1978), held a watching brief for ‘certain prosecution witnesses’. They were never named. Mr T.W. Ong held a watching brief for Air Vietnam, and Mr S.K. Lee watched the interests of Mr Ngo’s family. Mr P. Suppiah held a watching brief for Augustine Ang, the State’s chief prosecution witness.

  Mr Rajendran made his opening address on 4 May 1972. As the Solicitor-General, Mr A.W. Ghows, was to point out at the trial more than a year later, the purpose of a preliminary inquiry is purely to ensure that no one was made to stand trial unless a prima facie case is made out against him. “All that the Court below has to do is to record enough evidence to commit the nine accused to trial,” Mr Ghows had declared.

  Mr Rajendran told how the Chou brothers, Andrew, aged 31, and David, aged 34, out for revenge, plotted the killing of two or three businessmen. The brothers had asked two friends to round up a few boys to do the job for which they were prepared to pay $20,000. He said the job had to be clean and quiet and ropes were to be used to strangle the men quietly. They were to knock them off at the Chou brothers’ home and take them elsewhere for burial. David Chou, a divorcee with two young daughters, was a university graduate and sales manager at a commercial firm. Andrew was an air traffic supervisor with Air Vietnam. Andrew was involved with three syndicates in smuggling gold. “In October last year,” said the Senior State Counsel, “a sum of US$235,000 which had arrived on an Air Vietnam flight as payment to the three syndicates for gold, was missing. Andrew was pressured to find it. Andrew suspected that it had been stolen by certain members of the airport staff. After a few days of investigation, most of the money was recovered from Chua Nguan Key, a traffic hand.”

  As a result of this episode, relationships between the syndicates and Andrew were strained. The three syndicates were: Ngo Cheng Poh of Kee Guan Import-Export Co., in Pekin Street; Chee Pui Cheng, proprietor of Eastern Watch Co., and Lee Bor, proprietor of Lee Tong Heng Import-Export. Mr Rajendran said that Chee Pui Cheng did not trust Andrew anymore. He ceased exporting gold through him. Lee Bor sent only one more consignment through Andrew. This made Andrew angry. His income from gold trafficking was considerably reduced. It was then that Andrew planned Ngo’s murder and plotted to rob him of gold worth half a million dollars. Mr Rajendran said that after about two months of planning and the recruiting of seven people, the two brothers murdered Ngo (55 years old) and two of his employees, Leong Chin Woo (51 years old) and Ang Boon Chai (57 years old). The murder took place at Chou’s home at 19, Chepstow Close in Serangoon Garden Estate at midnight, on 29 December 1971.