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Tag: GOLD

  • Gold Rush From Dubai to Turkey Saps Supply as Premiums Jump

    Gold Rush From Dubai to Turkey Saps Supply as Premiums Jump

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    A salesperson shows gold bangles to a customer at the Dwarkadas Chandumal Jewellers store in the Zaveri Bazaar area of Mumbai, India.

    Surging demand for gold from Dubai to Istanbul has pushed physical premiums in the region to levels not seen in years as the biggest price slump in three decades lures consumers, according to MKS (Switzerland) SA.

    Premiums paid by wholesalers and bulk buyers in Dubai to secure a 1 kilogram bar of bullion are being quoted between $6 an ounce and $9 an ounce over the London cash price, said Frederic Panizzutti, global head of marketing and sales at the Swiss-based bullion refiner. That compares with about 50 cents before the rout, Panizzutti, also chief executive officer of MKS Precious Metals DMCC, said in an interview from Dubai.

    Gold fell to the lowest in more than two years this month on speculation that the global economy is recovering, unleashing a purchasing frenzy among coin and jewelry buyers from China to the U.S. Consumer demand for jewelry, bars and coins inTurkey and the Middle East represented about 9.4 percent of the global total last year, according to the World Gold Council. Bars have been cleared from display in the souks, according to Gerry Schubert, head of precious metals at Emirates NBD PJSC.

    “Physical demand has been tremendous in a way I haven’t seen for a number of years,” said Jeffrey Rhodes, global head of precious metals at INTL FCStone Inc., who’s worked in the industry for more than three decades. “The price collapse prompted a physical gold rush and the evidence of the extent of that is the prolonged period of high premiums that we’ve seen. Reports from the gold souks are that business is good,” Rhodes said from Dubai.

    Bear Market

    Prices plunged 14 percent in the two sessions to April 15, the most since 1983, and reached a low of $1,321.95 an ounce on April 16. Since then, spot bullion has rebounded 11 percent to $1,469.54 today as the surge in physical demand offset record outflows from exchange-traded products. Gold is still lower in April, heading for the worst monthly loss since December 2011 amid a bear market.

    In Turkey, the fourth-biggest gold consumer last year, bullion on the Istanbul Gold Exchange traded at premiums of as much as $25 an ounce over the London spot price, something that hasn’t happened in “a very long time, we’re talking years,” said MKS’s Panizzutti.

    “In the gold souk, you see some coins left over, but the investment bars are all gone from the windows,” said Schubert at Dubai-based Emirates NBD, the United Arab Emirates’ second- biggest bank by assets. Domestic retail prices moved to a premium of about $5 an ounce from a small discount before the rout, said Schubert, who has traded the metal since 1979.

    Largest Center

    Dubai is the largest gold-trading center in the Middle East, according to the Dubai Gold & Jewellery Group, an industry body that includes manufacturers and retailers. Trade was worth about $56 billion in 2011, up from $6 billion in 2003, according to data on the Dubai Multi Commodities Centre website.

    Gold jumped 4.2 percent last week, the most in 15 months, as coin demand from mints in the U.S. and Australia to the U.K. soared. The volume for the benchmark contract on the Shanghai Gold Exchange surged to a record last week, while premiums to secure supplies in Indiajumped to five times the level before the slump. China and India are the world’s largest buyers.

    Consumers in Singapore and Hong Kong are paying premiums of about $3 an ounce, compared with about $2 just after the rout, according to Ng Cheng Thye, head of precious metals at Standard Merchant Bank (Asia) Ltd.

    ‘More Patient’

    “Physical metal is still not available,” Ng said by phone from Singapore. “The Chinese are on holiday these few days and at this level, the market might slow down a bit on the demand side. People are a little bit more patient now compared with two weeks ago, where everybody was rushing for physical metal.”

    Chow Sang Sang Holdings International Ltd. said that jewelry sales at its 44 shops in Hong Kong more than doubled in the two weeks ended April 27 from a year ago. In China, financial markets are closed through May 1.

    “It’s not just a Middle East story, it’s all across the globe,” said Panizzutti. “The fact that premiums are so high, it means that no one is making enough. We are producing 24 hours a day.”

  • Turkey’s traditional gold trade comes under pressure – The Washington Post

    Turkey’s traditional gold trade comes under pressure – The Washington Post

    Photo by Vern Yip – Inside the Topkapi Palace, a gold ornament hangs with famous blue Iznik tile in the background. Turkey is a culture rich with craftsmanship and influences from all parts of the world.

    Picture 127

    By Daniel Dombey and Funja Guler | Financial Times, Published: April 24

    ISTANBUL — Sitting in his tiny shop in the heart of Istanbul’s Grand Bazaar, Mehmet Ali Yildirimturk explains why, despite the fall in gold prices this year, Turkey remains fascinated with the metal.

    “In Turkey, when a baby is born, you give gold. When a circumcision takes place, you give gold. At weddings you give gold,” Yildirimturk said as a longtime customer squeezed into the wood-paneled shop for a valuation of her bracelet.

     

    “People give gold as a way of providing economic support,” he added. “It is more gentle than giving money.”

    Yildirimturk, who has run his shop for 50 years, estimates there are 150 other gold merchants under the bazaar’s Ottoman-era arches. Just a few yards away, gold traders bark orders on their cellphones.

    But despite their place at the center of the country’s culture, Turkey’s gold merchants have particular reason to be discontented, over and above the metal’s steepest price decline in three decades. They are trying to fend off an attempt by the government to use the country’s hefty stock of gold savings to boost growth.

    According to Turkey’s central bank, the population holds at least $115 billion, and perhaps much more, under its collective mattress. And since Turkey has big investment needs, little long-term capital from abroad and a low savings rate, the state is trying to move the nation’s store of gold from under the bed to a more formal place in the economy — preferably banks, where it can be used as reserves or collateral.

    To the ire of Turkey’s legion of gold merchants, the banks have started to sell gold as well as buying it, trading not just bullion bars, but also the gold coins at the heart of Turkish culture.

    “They are trying to take the bread out of our mouths,” said Alaatin Kameroglu, chairman of the Istanbul Chamber of Jewelry, whose organization has sued both the bank regulator and the post office, which has also started trading gold, for unfair competition. “Banks should concentrate on banking and leave gold to us.”

    Events in Tehran and Washington have put additional pressure on the Turkish gold trade. Last year, as U.S. sanctions kicked in on banking transactions with Iran, the Islamic Republic stepped up gold purchases in Turkey, shipping the metal back — often via the United Arab Emirates — as an alternative way of getting capital into the country.

    The effect on Turkey’s economy was dramatic: In a $10 billion swing in trade, Ankara shifted from being a net gold importer in 2011 to a net exporter in 2012. In some months, Turkey’s gold exports to the UAE alone almost reached $2 billion.

    But now this business, too, has caught Washington’s attention and has been singled out for sanctions. In February, the most recent month for which figures are available, Turkey’s total exports of gold were worth $550 million, far below last year’s average of $1.1 billion a month — although they were still almost wholly accounted for by sales to the UAE and Iran.

    That drop in demand is likely to contribute to a rise in Turkey’s current account deficit this year, after a decline last year, and increases the woes of the country’s gold trade at a time when it is beset by other problems.

    Merchants in the bazaar cite the difficulties of doing business with Iran, adding that to do so requires frequent changes of name to avoid appearing on a U.S. blacklist. No one admits to selling to Iranians, who purchase gold bars rather than the stamped coins favored by Turks. At one store identified by competitors as being involved in the business, staff members refused to answer questions.

    But back in his tiny shop, Yildirimturk tries to emphasize the rosy side of the recent upheavals, remembering doing business with emigres from Iran in the 1980s, Bulgaria in the 1990s and Iraq in the 2000s.

    “There is always some crisis and tension in the Middle East, and gold gives some certainty,” he said. “Now that prices have gone down, it’s a good chance to buy it back.”

    — Financial Times

    Guler reported from Ankara.

    via Turkey’s traditional gold trade comes under pressure – The Washington Post.

  • Where Is The $80 million Gold From Ghana Seized In Turkey?

    Where Is The $80 million Gold From Ghana Seized In Turkey?

    Turkey stopped cargo freight flier with Gold from Ghana. Turkey is gradually becoming the busiest hub for gold shipments to the Middle East. The Turkish authorities gave four days in Istanbul to a freighter laden with 1.5 tons (worth $80 million) of gold from Ghana. The plane landed around early January at the airport Ataturk in Istanbul and was arrested for four days with 1.5 tons of gold on board by the authorities.

    The Turkish fleet origin, an Airbus A300, cargo aircraft was chartered for transporting Gold from Ghana to Dubai. Other media reported that the machine had come from Algeria. For safety reasons, the Turkish authorities (customs) sealed the aircraft, since the crew had no genuine documents covering their freight on board, they were requested by the Turkish authorities to present required requisite documents.

    Not quiet long ago, the Turkish Government was repeatedly criticised and advised from the international community to be watchdogs since large quantities of gold from Turkey in the Islamic Republic were delivered in the past few months despite an international embargo against the Iran.

    The Geological Survey Department (GSD) has absolved itself from blame in the on-ongoing investigations into the seizure of an aircraft in Istanbul, Turkey, allegedly carrying 1.5 tonnes (worth $80 million) of gold originating from Ghana and destined for the Islamic Republic of Iran.

    The GSD Director, John Agyei Duodu insists his outfit only carried out laboratory analysis on mineral samples and not on gold bars, when speaking to Peacefmonline.com in an interview. The Bureau of National Investigations (BNI) carried investigation into how a shipment described as mineral samples could turn to gold bullion. It will be recalled that sections of the media reported on the supposed gold bars seized at Istanbul-Turkey due to lack of documents. It was widely conjectured that the said shipment was payment by Ghana government in respect of some financial transaction with the Islamic Republic of Iran.

    Government, in two separate responses, denied any involvement in the use of gold to settle any transaction with the Government of Iran. Following that denial, President John Dramani Mahama directed that the matter be investigated by the security agencies. Even though president John Dramani Mahama had to rush to Turkey, we were later told he went there to commission Ghana Embassy in Istanbul/Turkey.

    Before the BNI could come out with its initial findings, sections of the media published that the US$80 million supposed gold bars, have mysteriously changed into thirty (30) boxes of mineral samples weighing 1,500kgs.

    The publication further accused state officials at the GSD and Customs Division of the Ghana Revenue Authority of collusion for the detained Gold from Ghana. The publications also questioned why and how state officials at the GSD, Customs Division of the Ghana Revenue Authority, Ghana National Chamber of Commerce and Industry and SG-SSB Bank Limited, with the speed of light, hurriedly prepared and signed for “Omanye” Gold Mining Limited, the company at the centre of the whole DEAL on December 31, 2012, to enable them haul the 30 boxes of so-called mineral samples to Dubai.

    The publications further sought to malign the integrity of the GSDsaying the claim on the certificate that the 30 boxes of minerals for laboratory analysis only and are of no commercial value could be a clever means by the Geological Survey Department to outwit tax officials because the regulations mandates Bank of Ghana to collect tax from both the buyers and the sellers.

    The absence of proper documentation on the said gold, according to the publication citing experts’ opinion, is said to have accounted for the lie that the gold was on its way to Iran to settle Ghana’s bilateral transactions, leading to the Turkish officials seizing the consignment on board the cargo aircraft chartered from Tripoli-Libya.

    Now, figures here, figures there, investigations yesterday, investigations today and investigations tomorrow, fact and the question is! where is the 1,5 tonnes of the Ghanaian Gold, worth $80 million which was temporarily confiscated in Turkey? Was is really a DEAL meant to settle (Ghana) debt in Iran or where ever, a THEFT or an act of CORRUPTION?

    FRANCIS TAWIAH (Duisburg – Germany)

    via Where Is The $80 million Gold From Ghana Seized In Turkey? | Feature Article 2013-04-23.

  • Government Of Ghana Says Its Digging Deep Into Turkey Gold Affair

    Government Of Ghana Says Its Digging Deep Into Turkey Gold Affair

    ACCRA, Feb 8 – The government of Ghana said here Friday it was digging deeper into the seized gold bars at the Ataturk International Airport in Istanbul, Turkey, last month.

    Minister for Information and Media Relations Mahama Ayariga said in a statement the state investigative apparatus, Bureau of National Investigations (BNI), had been tasked to unravel the mystery surrounding the gold deal.

    Two Ghanaians, Peter Bedzrah and Fredrick Kojo Essumang, the statement said, had been operating under the corporate identity of “Omanye Gold Mining Ltd” from a house at Tanta Hill, a suburb of the capital, without visible signs of a corporate entity.

    The statement said the two, said to have been involved in the transaction to supply gold to one Vahid Moradi Moghaddam, were still being interrogated.

    The statement continued that a ULS cargo aircraft (Airbus 300-B4) arrived at the Kotoka International Airport (KIA) from Tripoli, Libya, and filled a Landing Clearance Request form indicating it was to lift gold bars as its cargo.

    It said the aircraft was handled by Menzies Airline Handling Services from touchdown to departure.

    “The cargo departed Accra on 31st December 2012 with the goods which were destined for Dubai but was detained in Ataturk International Airport in Istanbul on 1st January, 2013, because of claims of questionable documentation,” the statement added.

    It explained that the consignment had arrived at the KIA for pre-export formalities under two certificates for ‘mineral samples’ and ‘laboratory analysis only and of no commercial value’.

    One Thomas Adu signed both forms for the Director of Geological Survey, one dated 31st December 2012, and the other dated 7th January 2013.

    The said mineral samples were consigned to an address in Dubai in the United Arab Emirates (UAE), said the statement.

    It said while one Isaac Anakwa Asante, Head of Operations of Menzies who inspected the cargo before scanning by Nick TC-Scan reported sighting gold bars, the exporter, Kofi Bedzrah of Omanye Gold Mining Ltd, insisted his company exported gold bars of 1.5 tons with a value of 62,000,000 dollars.

    “However, the Customs Division of the Ghana Revenue Authority (CD/GRA) Instructions for the Dispatch of Goods (IDG) form entered the goods as ‘mineral samples’. The pre-departure formalities were endorsed by Kwesi Avemee, a collector of CD/GRA, and Albert Kan Dapaah, a Narcotics Control Board (NACOB) official.

    “While mineral samples do not attract tax liability, it was found unusual to have mineral samples shipped in such tonnage,” the statement stated.

    Sections of the media reported last month the detention of an aircraft in Istanbul allegedly carrying 1.5 tons of gold originating in Ghana and destined for the Islamic Republic of Iran.

    There was speculation in the local media that the said shipment was payment by Ghana in respect of some financial transaction with the Islamic Republic of Iran.

    Government however distanced itself from the said transaction. Enditem.

    Source: Justice Lee Adoboe

    via Government Of Ghana Says Its Digging Deep Into Turkey Gold Affair.

  • Why Experts Are Praising Turkey’s Gold Policy

    Why Experts Are Praising Turkey’s Gold Policy

    Adrian Ash, BullionVault | Jan. 25, 2013, 10:50 AM | 717 | 1

    Adrian Ash

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    Adrian Ash is head of research at BullionVault, the world’s largest private-investor marketplace for physical gold and silver bullion

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    AMID the brouhaha over Germany’s gold reserves at the Bundesbank, there’s another central bank using gold actively to bolster its currency and financial stability.

    The strategy looks the same – sitting on big stockpiles of the stuff. But the aim differs, because gold is much closer to the everyday financial system. The tactics differ too. Because the central bank hasn’t bought and paid for this gold. Private citizens have.

    “Gold-based deposit accounts [in Turkey] surged 15% this year through the end of July,” explained BusinessWeek back in October, “three times the increase in standard savings accounts.”

    “Although much criticised for its use of ‘unconventional measures’,” the Financial Times added in December, “few would argue that the decision last year by Turkey’s central bank to allow the country’s banks to buy gold was anything less than a roaring success.”

    Buying gold isn’t quite right. Starting in October 2011, the central bank began allowing commercial banks to hold a portion of their “required reserves” – needed to reassure depositors and other creditors they had plenty of money to hand – in physical gold bullion. Starting at 10%, that proportion was then raised to 30%.

    Private citizens were similarly encouraged to hold their gold on deposit with their banks. That gold was thus transferred to the central bank’s balancesheet. Et voila! Privately-owned gold now backed the nation’s finances. A smart idea, which has coincided with Turkey’s currency rising, interest rates falling, huge current-account shrinking, and government bonds regaining “investment grade” status.

    Publicly targeting some of Turkey’s estimated 2,200 tonnes of “under-the-pillow” gold, currently worth some $119 billion, the CBRT’s governor Erdem Basci has meantime been awarded The Banker magazine’s prestigious “Central Banker of the Year 2012” award. But with everything going so swimmingly, might Turkey risk over-heating?

    Well, the CBRT this week cut its key interest rates – and raised the amount of gold which commercial banks choosing to use bullion as required reserves must hold with it. That fine-tuning is a bid to a) deter foreign investors from buying Lira and so pushing it Lira too high, too fast, and b) prevent those inflows boosting the pace of domestic credit growth by giving the banks too much money to play with.

    See, with Turkey’s mess of the early 2000s now fading from memory (it knocked 6 zeroes off the Lira in 2005), the currency recently neared 12-month highs against both the US Dollar and the Euro. “Amid accelerating capital inflows” from foreign investors, said the central bank in Tuesday’s policy statement, “recent credit growth has been faster than envisaged.

    “In order to contain the risks on financial stability, the proper policy would be to keep interest rates at low levels while continuing…to implement a measured tightening [of credit] through reserve requirements.”

    Reporting from Istanbul, Reuters notes that the CBRT raised its “reserve option coefficients” for Gold Bullion and non-Lira currencies. In other words, it forced commercial lenders who choose to hold a proportion of their cash reserves in gold or foreign exchange to deposit more with the central bank.

    “The measures will transfer as much as $2.9 billion in foreign exchange and gold from lenders to the central bank’s reserves,” says Bloomberg, “as well as withdrawing 300 million Liras from local-currency markets.”

    Analysts at Goldman Sachs had forecast this move last week, noting after comments from Turkish central bank governor Basci – and also noting last month’s rise of 2% in the Lira’s exchange rate to the Dollar – that CBRT “has shifted focus towards the financial stability risks posed by accelerating capital inflows.”

    Using interest rates and other tools, it would “lean against these inflows and their subsequent FX appreciation pressures,” said Goldman’s analysts. The CBTR this week cut its annualized rate for overnight loans to 8.75%. That compares with the 12% charged 12 months ago, when inflation ran to double-digits and the Lira was still struggling to find its floor, says the Wall Street Journal’s Emerging Europe blog.

    Can you imagine such a policy, let alone such a turnaround. Of course, not all of Turkey’s gold policy can be fully guessed by analysts outside, and there are still plenty of risks to Turkey’s growth and stability too. Not least its current account deficit…perhaps the 7th worst in 2012 at $59 billion (IMF forecast).

    Still, that was down from second place – behind the ever-winning United States of course – in 2011. That spot is now taken by the dear old United Kingdom, a nation which all-too famously sold half its national gold reserves at multi-decade lows between 1999 and 2002. A decade later our deficit with the rest of the world yawned above $80 billion last year.

    The UK could of course play a similar gambit to Turkey. Indeed, Bullion Vault set forth just such a modest proposal to Parliament early last year.

    “Make private gold deposited at the Bank of England free of capital gains tax. This would dramatically increase the financial firepower of the bank at a time when our commercial banks need support, as might our currency very soon.”

    Some hope! And in the absence of a central bank, or government, willing or able to tackle stability on your behalf, UK savers might want to note that gold did for Turkish households back when the Lira collapsed – time and again – on the currency market.

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    Adrian Ash is head of research at BullionVault – the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver vaulted in Zurich on just 0.5% dealing fees.

    (c) BullionVault 2013

    Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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  • Turkey aims to be in top 15 global gold producers

    Turkey aims to be in top 15 global gold producers

    ANKARA – The Turkish gold industry is planning to be among the top 15 countries in terms of gold production within the next three years, Today’s Zaman reported Wednesday.

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    “If things go well, we hope to earn a place on the top-15 list of gold-producing countries in the world by 2016,” Muhterem K?se, general coordinator of the Gold Miners’ Association, based in Ankara, has said.

    Gold production in Turkey has significantly increased in recent years. In 2006, only eight tons of gold were produced; by 2009, that figure had grown to 14.9 tons and last year, production reached 29.5 tons.

    Turks are also major consumers of gold. Turkey is among the top three countries – after India and China – in which people buy the most gold jewelry items. “In fact, as far as per capita consumption of gold goes, Turkish people are at the top of the list,” K?se said, noting that 40-50 tons of gold a year are bought by people in Turkey for ornamentation and/or as a means of investment.

    There are presently four companies, two of them with foreign partners, in Turkey operating in gold mining, and these companies paid a total of TL 37.7 million (nearly $21.5 million) to the state in 2011 in corporate income tax.

    Turkey earned $10.7 billion from gold exports in 2012, Economy Minister Zafer Ca?layan said. Out of the total figure roughly $6.5 billion came from Iran, $3.5 billion from the UAE and the rest from other countries. – SG

    via Saudi Gazette – Turkey aims to be in top 15 global gold producers.