Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Turkey Continues Gold-Buying Spree in Quest for Independence from US Dollar

  by    0   0

Turkey went on a gold-buying spree in 2017. That trend continued through the first two months of 2018 as the country continues to diversify away from foreign currencies – i.e. the dollar.

Data released by Borsa Istanbul shows Turkey imported 44.47 tons of gold in January and 16.03 tons in February for a total of 60.5 tons over the two-month period.

According to Reuters, gold imports to Turkey hit a record high of 370 tons in 2017. That was more than triple the 106.1 tons of the yellow metal imported into the country a year earlier. The 2017 total was the highest level of gold imports since the data was made available in 1995.

According to Turkish news source Ahval, the surge in gold buying is due to the central bank replacing foreign currency with the yellow metal.

The Turkish central bank has kept quiet about its quest for gold. Bank officials have said they are just seeking to diversify holdings. But according to Alaatin Aktaş, a reporter for the Dünya newspaper, the policy is the result of a request by President Recep Tayyip Erdoğan to increase the country’s gold reserves and reduce reserves of some foreign currencies.

Reading between the lines, it seems pretty clear Turkey is trying to move away from the dollar and euro. Relations between Turkey and nations such as the US and Germany have deteriorated over the last year.

The Turkish central bank kicked off its latest buying spree around the same time President Erdogan called for Turks to use gold instead of dollars to help stem a drop in the Turkish lira. London-based Metals Focus Ltd. consultant Cagdas Kucukemiroglu said the president is likely pushing the central bank to buy gold.

The president has always been pro-gold and is against the dollar, and that’s informing the central bank’s decision as well.”

We’ve seen a number of countries that have rocky relationships with the US move away from the dollar toward gold over the last year. Russia has bought a significant amount of the yellow metal. In January, Russia added another 20 tons to its reserves, passing China to become the world’s fifth-largest gold-holding country. Russia has bought gold every month since March 2015 in an effort to diversify its foreign currency holdings and minimize its dependence on the US dollar.

And China has boosted its holdings over the last few years as well.  Gold plays a key role in both China and Russia’s plans for economic independence. It seems likely Turkey is taking the same approach.

Interestingly, Turkey is also keeping more of its gold at home.  According to Ahval, the central bank typically stores its gold in London, New York and other financial centers, but is now storing it in Turkey.

This dovetails with another global trend – countries bringing their gold reserves closer to home. Yesterday that we reported that Hungary plans to repatriate all of its gold holdings. As an article at GoldSeek points out, central banks are buying gold and bringing gold home for the same reason  – to increase economic independence and shield themselves from counterparty risk.

The decision to place more focus on gold reserves is a statement by central banks and their governments to reduce the counterparty risk on their reserve assets. When holding another country’s currency you are vulnerable, the same applies to when a third-party holds your gold at a time when their own assets are perhaps more exposed than you’re comfortable with … The decision to bring gold home is a statement that says [Hungarian] Prime Minister Viktor Orban would rather have the country’s assets close to home rather than in the hands-off a country that perhaps does not have his own best interests at heart.”

It makes sense given current international dynamics that Turkey would also want to loosen the strings of US and Western European influence by unshackling itself from the dollar system.

Gold is a key to economic independence for countries looking to minimize the risk posed by the US fiat currency and to shake off the influence of foreign governments. The Turks seem to recognize this.

WhyBuyGoldNowBanner.070815.590

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Fed Runs Repo Operations; Is It Baby-Stepping Toward QE?

In a move “Bond King” Jeffrey Gundlach said could be a prelude to the next round of quantitative easing, the New York Fed conducted a repurchase operation involving about $53 billion in debt instruments on Tuesday. The move to designed to unplug the financial system’s “plumbing” with an injection of cash was the first such […]

READ MORE →

Another Month, Another Record for Consumer Debt

Americans continue to drive the economy along spending money they don’t have. Consumer debt increased yet again in July, setting another record, according to the latest data released by the Federal Reserve. Total consumer debt surged $23.4 billion in July, driven by a huge jump in credit card balances. The big rise in consumer indebtedness […]

READ MORE →

Budget Deficit Shoots Past $1 Trillion for Fiscal 2019

The federal government continues to spend money at an insane rate and is running up budget deficits reminiscent of the Great Recession era. With one month left to go, the federal budget deficit for fiscal year 2019 eclipsed $1 trillion in August, according to Treasury Department data released last Thursday.

READ MORE →

Corporations Piling Up Debt at Record Pace

Corporations are piling on the debt. Last week, companies borrowed $74 billion in the US investment-grade bond market. It was the largest corporate debt increase for any comparable period since they started tracking such things in 1972.

READ MORE →

Russia’s Gold Bet Paying Off; Reserves Top $100 Billion

As Bloomberg put it, Russia’s bet on gold looks better every month. The Russian Central Bank’s gold reserves have topped $100 billion thanks to continued buying and surging prices.

READ MORE →

Comments are closed.

Call Now