North Korea has begun to sell large amounts of gold to China in a bid to tide over its economic crisis, multiple sources familiar with North Korea affairs said Wednesday.
The disposal could be an indication of an imminent economic collapse as it goes against founding leader Kim Il-sung's order to never sell the country's gold, according to the sources.
"Since several months ago, North Korea has begun to sell even its gold," one source said, asking that he not be identified. "Overseas sales of gold are a barometer of whether the North Korean economy is in a crisis or not."
It is the first time that North Korea has sold gold since its leader Kim Jong-un took power in late 2011 following the death of his father Kim Jong-il, the sources added. Kim Il-sung is the current leader's grandfather.
According to South Korean government data, North Korea holds about 2,000 tons of gold reserves worth at least US$8 billion
North Korea's economic situation is expected to worsen following the recent purge of Jang Song-thaek -- Kim Jong-un's once-powerful uncle and guardian -- as he had handled all economic projects with foreign countries, another source said.
An economic collapse in North Korea could lead to greater economic cooperation with South Korea but also increase the risk of a military provocation against the South, experts said.
Is this just another rumour designed to force the price of gold down? The 2000 tons of gold reserves would be a surprise to many. It could well be that this number actually refers to unmined gold reserves, which happens to be estimated at 2000 tons according to another source
Asia-Pacific consultancy the Nautilius Institute reckons the DPRK's unmined gold deposits total perhaps 2,000 tonnes.
No doubt the rumour of a sale of 2000 tons will put a downward pressure on gold prices, even though it might concern unmined reserves. No doubt the Chinese central bank is a willing buyer.
It should also be noted that South Korea, which is the source of this article, has many times in the past said that the collapse of North Korea is imminent.