According to Turkey’s Hurriyet Daily News, the country imported more gold in 2013 than ever before on record.
Meanwhile, silver imports in December reached their highest levels since at least 1999 and were 60% higher than in 2012, Bloomberg reported.
So what’s driving Turkey’s interest in precious metals?
For one, gold and silver prices just finished off their worst year in decades; silver lost about 36% while gold shed 28% as the US and global economies showed signs of improvement.
These lower prices boosted physical demand not just in Turkey but also in China where gold consumption reached record highs.
The Turkey-Iran fiasco
Another contributing factor is Turkey’s controversial gold-for-gas deal with Iran. Though this scheme, Turkish officials help Iran circumvent Western sanctions aimed at preventing Iranian oil from entering global markets.
The deal – which caused a massive corruption scandal in Turkey recently – allowed Iran to sell oil and natural gas to Turkey and get paid in gold, thereby bypassing sanctions which were essentially designed to ‘trap’ Iran’s oil earnings in foreign accounts.
Because Turkey produces very little gold itself, it has had to boost imports. According to Hurriyet, the country brought in 302 tonnes of gold in 2013 – a 150% increase on 2012.
The CEO of Halkbank, the Turkish bank involved in the shady dealings, argues that its actions were legal because there was no law preventing the sale of precious metals to Iran until July 2013, when the Obama administration officially closed this loophole. Halkbank said these transactions stopped in June, as reported by Reuters.
Meanwhile, Turkey’s gold and silver imports have been rising sharply. In December the country brought in just under 32 tonnes of gold – a 64% increase on the previous month. Silver imports gained 36% on November levels.