Ankara has released the latest figures for Turkish-Iranian trade and they have yielded one very interesting statistic: in the last five months, three quarters of Turkey's gold exports have gone next door to Iran. Reports Today's Zaman:
Data from the Turkish Statistics Institute (TurkStat) have shown that Turkey exported gold worth $4.02 billion in the first five months of 2012, with $3.08 billion of that sum exported to Iran. This means Turkey’s gold exports to Iran have increased roughly eightfold compared to the same period in 2011. It is speculated Iranians are turning to gold as a method of saving as Western sanctions tighten.
The mass purchase of Turkey’s gold is being undertaken by rich Iranian families living in Turkey. These families largely do business in the fields of construction and iron and steel production. There are rumors that they purchase Turkish gold via third persons in order not to be noticed, and that they entrust the purchased gold to the Central Bank of the Islamic Republic of Iran (CBI), again via third persons. The CBI supports the purchases in order to gain strength in the face of increasing sanctions from European countries.
Rich Iranians may be turning to Turkish gold as a kind of safe haven, but the Financial Times' "Beyondbrics" blog suggests something else is going on. From the FT:
So what’s going on?
In a nutshell – sanctions and oil.
In recent months, western powers, notably the US and the European Union, have tightened financial sanctions on the Islamic regime in an attempt to force Iran to scale back or halt its efforts to enrich uranium.
In March, Iran was cut off from from Swift, the global payments network, effectively blocking the country from performing any international financial transactions.
With Tehran struggling to repatriate the hard currency it earns from crude oil exports – its main foreign currency earner and the economic lifeblood of the country - Iran has began accepting alternative means of payments – including gold, renminbi and rupees, for oil in an attempt to skirt international sanctions and pay for its soaring food costs.
“Iran is very keen to increase the share of gold in its total reserves,” says Gokhan Aksu, vice chairman of Istanbul Gold Refinery, one of Turkey’s biggest gold firms. “You can always transfer gold into cash without losing value.”
Turkey’s gold exports to Iran are part of the picture. As TurkStat itself noted, the gold exports were for “non-monetary purpose exportation”. Translation: they were sent in place of dollars for oil.
Despite the exchange of gold between the two countries, Turkey's consumption of Iranian oil has dropped drastically in recent months, going from a high of some 280,000 barrels per day to an average of 110,000 bpd in June.