Ethiopia's national bank has been told to inspect all the gold in its vaults to determine its authenticity.
Ethiopia's national bank is facing a big problem that originally started off as a small one. It all started when the Ethiopian Central Bank exported a consignment of gold bars to South Africa and were sent bank, claiming that they were actually steel bars with gold coating/covering. An investigation was carried out and it was found out that the Ethiopian bank had actually had made a purchase of fake gold. The situation appeared to have been solved when fake gold supplier and his business associates were arrested. Among the arrested there were chemists from the Geological Survey of Ethiopia whose job was to certify if the bank's gold purchases were authentic or not.
Now the problem has grown into a much more serious level in the governments point of view. It has been found out that another batch of gold that has been in the bank's vaults for several years has also been analyzed as fake. Because it is the national bank that has been found out to have fake supplies of gold, it has been in the governments concern to inspect all the gold in the bank's vaults. The usually normal process of sending consignments of gold to other banks has presented several serious problems/obstacles for not only the bank and government, but also the gold sellers.
Analyzing all the gold in the national bank's vaults will not only cost time but also money. This would not normally provide that much of a problem but it is evident that the bank/government of Ethiopia has faced and will face huge losses in credit (bank's savings) because the discovery of fake gold leads to the conclusion that the bank has purchased gold plated steel for millions of dollars. The concept that we learnt in class was that a bank provides the opportunity for customers to get interest on their funds. Even though the banks overseas allow considerable percentages of interest (compared to Korean banks), they make that much (or even more) of a profit by buying stocks etc. Following the loss of millions of dollars due to the purchase of fake gold, what will happen to the customer's funds that were used to purchase these considerable consignments of fake gold?
I thought this problem was the most serious one, but looking at it from a sellers point of view, it is also a big disadvantage. Gold is mined in considerable quantities in Ethiopia, and from now on all this gold has to be tested and analysed by the geological survey. This will delay time and also cost the sellers and buyers. Maybe this is why the price of real gold is currently soaring.
It still remains a mystery to whether the gold originally purchased by the bank was indeed fake, or if the real gold in the vaults was switched with the gold coated steel.
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