Turkey now a major gold exporter on crisis

Turkey now a major gold exporter on crisis

Hurriyet Daily News with wires

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The country imported an average of 232 metric tons of gold a year from 2003 to 2007, GFMS said in a report on its Web site late Wednesday. Net exports in the first two months of this year may have exceeded total imports in the first half of last year, GFMS said.

Turkey imported about 76 tons of gold in the first six months of 2008, according to the Istanbul Gold Exchange.

"As the economy started to weaken toward the end of last year, consumers took the opportunity to raise funds by selling back a portion of their jewelry stock to local retail outlets," Bloomberg quoted GFMS analyst Philip Newman as saying.

Additional scrap metal, a "collapse" in domestic demand for jewelry and coins and a shortage of refiners able to produce gold bars accredited by the London Bullion Market Association, a global benchmark, spurred more exports, GFMS said.

Gold priced in Turkish Liras rose to a record last month. On Wednesday, one gram of 24-carat gold bullion was selling at 49.6 liras in Istanbul.

As countries such as Turkey increase their gold sales in global markets, the precious metal’s advance in price is slowing down.

Buying up gold has become a buoyant new business as jobs are lost and incomes threatened in the global economic downturn, with new dealers opening in Europe and North America to tempt the cash-strapped to part with their gold, Reuters said in an analysis yesterday.

"An influx of scrap gold onto the domestic market was behind a drop-off in Turkey's gold imports to zero in the first two months of this year, against nearly 32 tons a year before," Reuters reported. "Rising scrap sales meant refineries minted so much bullion in Turkey that it was exported for sale on the international market Ğ a new trend for the country."

The world's largest gold consumer, India, and China are also said to be exporting gold, while scrap has been flowing steadily into Dubai, the Middle East's largest gold trading market, according to the Al Ghurair Giga Gold Refinery.

Scrap gold collected by dealers is melted down by refiners and recast into bars and coins, which can then be sold as investment products.

In major gold markets such as India, the Middle East and Turkey, scrap sales almost always rise when prices go up. In these regions, gold is often seen as an easy source of liquidity.