video transcript

Soaring gold prices are a boon to small-scale miners in the southern Philippines. Camilo Landa takes home 10 times more than the average worker, allowing him to support his eight children. But while miners are reaping rewards, the Philippine government is losing out. By law, gold produced in the country's small mines should be sold to the Central Bank, to pump up their reserves. But the bank's purchases have plummeted by 98 percent this year. Many point out to a newly imposed tax on gold as the reason behind the rise in smuggling. Officials and sources say the gold is being smuggled to Hong Kong, the main channel for gold flows into China. SOUNDBITE: DIRECTOR OF BUREAU OF MINES AND GEOSCIENCES, LEO JASARENO, SAYING (English): "Our suspicion is that it's either black market or smuggled out of the country. So 80 percent of gold, lost." Reports of illegal sales to China are unverified, but official data from Hong Kong reveals gold shipments from the Philippines went from 11 kilos in the year 2000 to more than 81,000 kilos in 2010. In a puzzling discrepancy, Philippine customs only accounted for three percent of that volume. The government has vowed to impose stricter controls on these small scale mines. Illegal mining now accounts for up to 15 percent of global gold output.