I would like to share a story with the readers and hear your opinion. It was around 1985 in Northern Mexico before all the drug scandals. The new President of Mexico set to completely change the corruption in the customs authority especially in the US/Mexican border. To this end he entrusted a highly trustworthy and honest economics professor from a northern university (let’s call him Guzman) and put him totally in charge. Guzman then turned to some of his most trusted ex-students to fill the supervisory ranks and they in turn completely cleaned house hiring and training new agents.
After a couple of years the customs department was totally transformed. A nephew of mine (let’s call him Hector) who had an economics degree, had become an economics professor at a university as well. He was a close friend with his mentor, Professor Guzman. Hector became a Sector Supervisor.
The country was divided into sectors with the border region split in four such sectors. The sector supervisors rotated from one sector to another in order to avoid corruption.
Hector, who has an impeccable reputation in our family, told me a story soon after it happened. One day he and his driver were patrolling the highway near Ciudad Juarez on the Mexican side, which shares the border with El Paso, TX. They were driving north towards the city where they followed a slow moving large truck. The truck was obviously overloaded and looked suspicious. They pulled the truck to the side of the road and in inspecting the bill of lading, it showed that it was carrying artisan plate ware. Hector climbed on the truck pulling the canvas cover aside to inspect the crates. He opened one of the crates and pulled out a thick dinner plate. He noticed the excessive weight and upon close inspection, he noticed that the heavy clay plates were suspicious. He tried to break one but discovered that it was gold covered with clay. He said, "I immediately surmised that someone was probably trying to smuggle gold out of the country."
After questioning the driver they saw that he was clueless as to what he was carrying in the truck. They had him drive the truck to a fenced parking area outside the customs office and held the driver for further questioning. Hector posted armed guards around the truck and the next morning, when Hector was in the office, a military detachment lead by an army general came into the compound. The general told Hector that he was there to confiscate the truck and the contents. Hector held his ground. By law the investigation was under the Customs Department and there are separation of powers between the Mexican Federal Government and the military. The situation was very tense. The general drove away leaving the soldiers there.
Hector called Professor Guzman and as he explained what had happened. Guzman agreed with Hector and gave him his support. A while later, the general showed up again and told Hector to call his superior, Director Guzman. Before he made the call, Guzman called Hector and told him, "Step back and let the general take the truck. The order comes from the highest authority." The implication was the President of Mexico.
Since then presidents have changed and Guzman is back to teaching college. I was told this at a time when I was a very busy executive living in Europe. As I have learned more about the history of gold and it being replaced by the USD as the international currency of appreciating value. Countries replaced their reserves to USD which did appreciate against their own currency.
Now, I have some questions that I have not been able to answer in my mind:
1. In order for countries to replace their reserves with USD did they use gold to purchase the dollars printed by our Federal Reserve? If so, what happened to the gold that was exchanged and who owns it?
2. In regards to this shipment of gold from Mexico mentioned here, who was more likely to be transferring the gold to the US and for what reasons?
3. Maybe there had to be a very strong and powerful connection in the US to bypass US customs.
Remember that this was before the drug cartels were this powerful. The powerful cartels were mainly in Colombia then.
I would appreciate your comments.