N.Korea Turns to Selling Gold Reserves

North Korea has exported more than 2 tons of gold to China over the past year to earn US$100 million. Even in tough times during the Kim Il-sung and Kim Jong-il regimes, North Korea refused to let go of its precious gold reserves.

An agency known as Room 39, which manages Kim Jong-un's money, and the People's Armed Forces are spearheading exports of gold, said an informed source in China. "They are selling not only gold that was produced since December last year, when Kim Jong-un came to power, but also gold from the country's reserves and bought from its people."

North Korea has been suffering a worsening cash crunch since South Korea severed economic ties following the sinking of the Navy corvette Cheonan in 2010, while its money reserves were depleted to fund lavish celebrations of nation founder Kim Il-sung's 100th birthday in April and the failed launch of a space rocket.

A meeting of the rubberstamp Supreme People’s Assembly on Tuesday is expected to focus on agricultural reforms aimed at alleviating the impact of economic woes.

North Korea produces one to two tons of gold a year. Mines in South and North Pyongan Province and North Hwanghae Province are believed to have around 1,000 to 2,000 tons of gold deposits.

North Korean trading companies have secretly been selling gold in China, said one ethnic Korean businessman in China. "These companies are operated by the military and Workers Party and are collecting gold from the mines and forcefully buying up gold from the people in certain cases."

Many North Koreans apparently hide stashes of gold to maintain some safe assets amid runaway inflation.

Some senior officials are reportedly worried that the new leader has even laid his hands on the gold reserves to get the cash to fund extravagant celebrations and buy luxury products.

The South Korean government believes Kim Jong-un spent $40 million building a statue of his late father Kim Jong-il and blew more money on his own ski slope and sauna.

englishnews@chosun.com / Sep. 25, 2012 12:28 KST