Gold imports hit highest on record

LONDON/ANKARA - Reuters

Turkey imported 270.7 tons of gold in the first 11 months of the year, more than double 2012’s full-year imports. Daily News photo

Turkey’s gold imports have surged to their highest on record so far this year after a hefty drop in bullion prices, with further progress signposted if restrictions on trade with Iran are formally eased.

Turkey imported 270.7 tons of gold in the first 11 months of the year, data from Borsa Istanbul showed, more than double 2012’s full-year imports of 120.8 tons. The rise stemmed chiefly from this year’s sharp drop in gold prices, which have fallen 26 percent since December 2012 after 12 straight years of gains.

“Turkey, like most of the price-sensitive markets, saw this year’s lower price level as an opportunity to replenish stocks and release some of the pent-up demand that has been building as consumers have been priced out of the market,” Cameron Alexander, an analyst with Thomson Reuters GFMS, said.

“Official coin demand has more than doubled, investment demand has also more than doubled, and jewelry demand has rebounded by around a fifth this year.”

As well as the price outlook, further growth in imports next year will depend in part on how far Iranian demand for gold from Turkey picks up, Alexander said, after the trade tailed off this year due to U.S. sanctions.

Iran could obtain access to $1.5 billion in revenue from trade in gold and metals under the terms of an interim deal agreed last month in Geneva between Iran and six world powers. Turkey’s gold trade with Iran boomed in 2012 when Ankara was paying for its natural gas and oil imports with Turkish lira, and Iranians were using those deposits held in Turkey’s Halkbank to buy gold.

Sanctions on metal trade

“Given the sanctions on metal trading have been lifted, we may see a return of this trade,” Alexander said. “This would in turn drive imports again to meet the gas-for-gold transactions. I have no evidence at this point that there has been any increase in trade, but we are watching closely.” Turkey’s gold imports dropped sharply after the global financial crisis pushed gold prices sharply higher from 2008 onwards. In 2009, when prices climbed 25 percent, shipments slumped to 37.6 tons from 165.9 tons a year earlier.

Borsa Istanbul does not produce gold export data, but a separate report showed that on a U.S. dollar basis, exports of precious metals and stones were less than half 2012 levels in the first 10 months of the year, according to Mitsui Precious Metals analyst David Jollie.

That suggests the rise in demand was local, he said.

“You’ve had quite a long period now of a relatively weak economy in Turkey, and high gold prices,” he said. “Now we’re at a point where gold is cheaper and the economy is showing signs of growth, so it’s natural that people want to buy gold.”

Gold is a traditional investment for many Turkish people seeking to hedge against sharp fluctuations in their currency. Jewelry, such as women’s gold bangles gifted at weddings, is seen by many as a safe store of wealth.

“Because of this significant fall in prices, we saw gold imports rising a lot in April to June,” Gökhan Aksu, deputy general manager of Istanbul Gold Refinery, said.

“It was both reactionary buying from the producers and also those who wanted to take advantage of the arbitrage.”