KARACHI: A leading gold trader has said that speculators active on WhatsApp groups operating after the official hours of trading are responsible for the ‘artifical hike’ in gold prices in Pakistan.

“Around 3,000 people are involved in this and they are operating on around 13 WhatsApp groups,” Haji Haroon Chand, the president of All Sindh Sarafa Jewellers Association, said in a conversation with Aaj News Business Editor Imran Sultan on the show Pakistan Economy Watch.

Chand said that these speculators were doing what currency speculators did in the past. “We have witnessed this over the last 12 months now,” he said on the speculative buying on WhatsApp groups inflating gold rates.

Sultan said that the price of gold was on the up even though the rate of the dollar had stabilized.

“Even when the value of the dollar is decreasing, the rate of gold is going up by Rs6,000 to Rs8,000 per tola in the local market,” said Haji Haroon.

The host and the guest agreed that purchasing power had gone down in Pakistan, with even the upper class using the precious metal as investment / saving.

Both agreed that demand was low, with Haji Haroon emphasising that price increase was not demand driven.

“If a shopowner takes an order, and the rate of the dollar suddenly increases by Rs5,000 in the next hour, what would he think,” Haji Haroon said.

“For instance, the market closed at Rs144,600 on Friday, but on Monday, trading was happening at the Rs147,000 mark,” Haji Haroon said, adding that even though the international market was closed over the weekend and the rate of the dollar also didn’t change by much.

“But these people, they can change rates by Rs6,000 to Rs8,000,” he said of the speculative traders active on these WhatsApp groups.

When asked whether the association had reported the issue of investigators, the Federal Investigation Agency (FIA), Haroon said he had talked about it on multiple talk shows, and now it was up to the authorities to follow through.

Sultan also pointed out that the bullions market wasn’t regulated, with traders opting not to engage with the mercantile exchange, set up back in 2005. He also talked about cartelization and the State’s failed to provide a conducive environment for the sector to thrive.

Haroon pointed out that back in the day, gold traders would use the rates in Dubai as a benchmark. “They would add Rs50 as their own margin and open the rate. Now, people are doing it as they see fit, and the difference is often in thousands of rupees per unit.”

Money laundering

Taking gold out of Pakistan under false pretext was another aspect of the conversation. Both Sultan and the guest pointed out that gold traders can import gold in lieu of the gold exported from Pakistan.

Sultan elaborated how money could be laundered using gold. He said that an investor asks a jeweller to import gold for X amount. The investor can get that gold converted to jewelry. “In some cases, people wear upto 40-50 tola of jewelry on flights,” said Haji Haroon, saying this manner of ‘flight of capital’ is known to take place.

“The Customs department should take notice when someone is taking that much jewelry out of Pakistan,” he said.

It is permissible to take gold out of Pakistan provided that if it is sold abroad, the money raised through it is returned to an account in Pakistan instead of being parked abroad.