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LAWRIE WILLIAMS: Huge rise in Turkish gold imports in December

Jan
04

The political dissent in Turkey and the accompanying government clampdown on accused dissidents, coupled with the country’s active participation in the civil war in neighbouring Syria and the raised terrorist threat and action, has seen a big increase in gold imports into the country in December.

According to Reuters. gold imports to Turkey rose to 36.7 tonnes in December, up from 4.65 tonnes in the same period a year earlier, their highest monthly level in just over two years.  And, for 2016 as a whole, imports more than doubled to 106.2 tonnes from 48.7 tonnes in 2015, the latest data shows.

Turkey has been a key conduit for gold flowing into other Middle Eastern nations – notably Iran when the latter had sanctions imposed on it.  Turkey is a big importer of Iranian natural gas, and paying for this in gold enabled monetary sanctions to be circumvented.  Turkey does have a burgeoning gold mining sector, but overall only produced around 27.4 tonnes in 2015 – a fall from the two previous years according to consultancy Metals Focus.  Its mine production apparently peaked in 2013 at 33.6 tonnes, but there has been a considerable amount of gold exploration and some good sized deposits have been delineated.  One can probably expect gold output to rise in the years ahead.

If one classifies Turkey as being in Europe, which it likes to do itself, and Russia as being in Asia, Turkey  is very comfortably the European continent’s largest gold producer, although technically all the gold output comes from mines in the Asia Minor part of the country.  According to the Turkish Gold Miners Association (TGMA), the country hosts some of the world’s largest gold deposits with reserves of 800 tonnes and predicted resources of 5,700 tonnes.  However contrary to TGMA  forecasts which were looking for 50 tonnes of gold output in 2015 the miners have fallen short due to working lower grades and permitting difficulties which have hindered some expansions and new projects – although perhaps only temporarily.  2016 gold mine output is thus estimated at around 30 tonnes.  Turkey is, according to the IMF, the world’s 13th largest holder of gold at 452.5 tonnes.  However the nation includes gold holdings by it commercial banks in its total figure so this level is more prone to fluctuation than that for most other nations.

While Turkey may be acting as a gold conduit into Iran, it is also a major consumer of gold in its own right and it citizenry has a strong affinity for the yellow metal.   A World Gold Council report, published in early 2015 about the role of gold in Turkey entitled ‘Turkey: Gold in action’ was introduced thus: At an average of 181 tonnes per annum over the past 10 years, Turkey is the world’s fourth largest consumer of gold accounting for around 6% of global consumer demand, and we estimate that Turkish households have accumulated at least 3,500t of ‘under-the-pillow’ gold.”  This serves to demonstrate just how important Turkey’s role is in the global supply/demand/hoarding equation.  While nowhere near China and India as a top gold importer it is hugely significant as an ‘also ran’ gold consumer so the big rise in the December import figure is an important pointer towards gold demand in areas of unrest, or close to them.

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com