{"id":1404813,"date":"2023-08-16T07:30:00","date_gmt":"2023-08-16T11:30:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1404813"},"modified":"2023-08-16T07:30:00","modified_gmt":"2023-08-16T11:30:00","slug":"how-turkeys-love-affair-with-gold-impacted-the-global-market","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/how-turkeys-love-affair-with-gold-impacted-the-global-market\/1404813\/","title":{"rendered":"How Turkey’s Love Affair With Gold Impacted The Global Market"},"content":{"rendered":"

How Turkey’s Love Affair With Gold Impacted The Global Market<\/span><\/p>\n

\n

Via SchiffGold.com,<\/em><\/a><\/p>\n

Turkey\u2019s love affair with gold has had a major impact on global gold flows,<\/strong> especially through the first half of 2023.<\/p>\n

<\/a><\/p>\n

Turks have historically held a lot of gold, both in jewelry and investment form. The country ranks as the fifth-largest gold market in the world. But with recent economic turmoil in the country demand for gold has exploded.<\/p>\n

According to the World Gold Council, Turkish demand for\u00a0gold bars<\/a>\u00a0and\u00a0gold coins<\/a>\u00a0increased five-fold during the second quarter of this year, pushing total demand to a record 98 tons through the first half of 2023.<\/p>\n

Gold jewelry demand has also surged in Turkey this year, posting a fourth consecutive double-digit percentage increase in Q2, H1 demand came in at 20 tons. That was up 25% year-on-year and marked a five-year high.<\/strong><\/p>\n

Since the start of 2020 Turkish bar and coin demand has made up, on average, 9% of the global total. That\u2019s more than double the country\u2019s 4% share between 2010 and 2020. Turkey\u2019s surging investment demand accounted for 17% of global bar and coin demand in Q2\u201923.<\/p>\n

What drove this big spike in demand?<\/strong><\/p>\n

In a nutshell: currency depreciation.<\/p>\n

According to the World Gold Council, \u201cA combination of high inflation and regular currency depreciation over the past few decades has fueled healthy growth in retail gold demand in recent years.\u201d<\/strong><\/em><\/p>\n

The Turkish economy has long been subject to bouts of price inflation, but moves by the government and the central bank over the last two years put price inflation on steroids.<\/p>\n

At the assistance of President Tayyip Erdo\u011fan, Turkey\u2019s central bank began cutting interest rates in September 2021. According to\u00a0a CNN report at the time<\/a>, the Turkish president holds the unorthodox view that interest rate cuts can rein in price inflation.<\/strong><\/p>\n

Predictably, the lira crashed. It lost 15% against the dollar in a single day in November 2021.<\/p>\n

When the Central Bank of Turkey began cutting rates, price inflation was already running at 19%. As the central bank slashed rates, the official Turkish CPI climbed to 85% on an annual basis by October 2022. Independent economists measured the country\u2019s price inflation at 185%.<\/p>\n

As price inflation soared, Turks piled into hard assets, including real estate and gold in an attempt to protect their wealth from the country\u2019s rapidly depreciating currency.<\/strong><\/p>\n

Moves by the Turkish government earlier this year only served to increase the demand for gold.<\/p>\n

After a catastrophic earthquake in February 2023, the country\u2019s treasury imposed an additional 20% fee on gold imports from countries outside the EU that did not have a free trade agreement with Turkey.\u00a0According to\u00a0Reuters<\/em><\/a>, the move was intended to shrink the country\u2019s rapidly growing trade deficit.<\/p>\n

The government later banned some gold imports.<\/strong><\/p>\n

Predictably, these import restrictions caused a big drop in gold supply within the country even as demand was surging.<\/p>\n

In order to meet local demand, the Central Bank of Turkey sold 165 tons of gold into the domestic gold market over a three-month period.<\/strong><\/p>\n

Prior to March, the central bank ranked as the world\u2019s biggest gold buyer. With the Turkish bank significantly reducing its gold holdings, net central bank gold reserves fell for several months.<\/p>\n

The Central Bank of Turkey\u00a0returned to gold buying in June<\/a>.<\/p>\n

As the government put the squeeze on the gold supply, premiums soared<\/strong>, hitting levels between $100 and $150 per ounce. But even those high premiums couldn\u2019t dent the Turkish appetite for gold.<\/strong><\/p>\n

The country normalized gold import regulations in July. Premiums dropped back to normal levels, but according to the World Gold Council, there was little selling by the public, despite record-high gold prices in lira terms.<\/p>\n

And this month, the Turkish government has reinstated gold import quotas in order to lower the country\u2019s current account deficit and replenish central bank reserves. It also slapped additional taxes back on some gold imports.<\/p>\n

The Central Bank of Turkey got a new governor in June. He reportedly holds more conventional views on monetary policy.<\/p>\n

According to the World Gold Council, \u201cAgainst this backdrop, it seems likely that Turkish investment demand will remain strong.\u201d<\/p>\n

The government is strictly controlling gold imports for now, but whether that continues \u2013 and whether the TCMB is again forced to sell gold domestically to satisfy unmet needs \u2013 depends upon the performance of the broader Turkish economy and the nation\u2019s foreign exchange position. Needless to say, these issues will attract attention from global gold market followers.\u201d<\/strong><\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 08\/16\/2023 – 03:30<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/how-turkeys-love-affair-gold-impacted-global-market<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

How Turkey’s Love Affair With Gold Impacted The Global Market Via SchiffGold.com, Turkey\u2019s love affair with gold has had a major impact on global gold…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1404813","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1404813","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1404813"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1404813\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1404813"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1404813"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1404813"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}