CONFIDENTIAL
Treasury Chambers
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M A Goodfellow Esq
Foreign and Commonwealth Office Hong Kong and Indian Ocean Dept LONDON SW1
Please reply to The Secretary HM Treasury
Your reference
Our reference
2F RMSAQ/2
Date
27 December 1973
Daw Goodfellow,
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In your letter of 17 December you asked for a contribution dealing with exports of gold bullion from the United Kingdom that could be included in Mr Royal's reply to Mr Alan Ellis.
You might like to include the following passage. The sentence in brackets reflects the extent of knowledge within the Bank of England and Treasury. However that knowledge is probably inadequate in this area, and it may be that the Home Office or Customs and Excise would be in a better position to make a definitive statement.
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The Government does not know the ultimate destination and use of exported gold. Gold transactions in the United Kingdom are governed by the provisions of the Exchange Control Act 1947. Provided a non-resident makes payment in an acceptable foreign currency or external account sterling for the gold which he purchases, he may feely export it. It would be improper to use Exchange Control powers for purposes other than the defence of the United Kingdom's balance of payments. In any event restriction would not achieve the prevention of any traffic, that might be connected with or financed by gold transactions since purchases would be transferred to another financial centre and either London would lose both selling and buying orders or the other centre concerned would buy from London and sell to the Far East buyers in question,
We have no evidence that this trade finances illegal international narcotics trafficking
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