It is happening even today. It was several thousand years ago that money and value were separated and value became represented by assets, often assets with no intrinsic worth but increasingly by assets that were recognisable and convertible. Once gold is melted down, it does not lose its value, only its shape. It can be refashioned and having arrived in one place as one thing, it can leave there as something else - and that need not even be the same amount of gold. Gold remains one of the main non-currency means of holding money including laundered money.
Diamonds are a particular favourite, too.
Whilst it is true that, in the USA, prohibition and a restriction on gambling made large amounts of cash for those prepared to break the embargoes the most important fact about that time was that it caused a dramatic increase in financial crime - in our definition, financial crime is a crime that gives direct access to the proceeds of the offence. Sanctions busting was a financial crime because for every offence committed, the criminal immediately received cash in his hand. Thus it created an immediate problem over what to do with that money. Opening a cash business was the obvious thing to do. This may or may not be true.