Turkey wants the world’s gold, with few questions asked

Gold shops in Grand Bazaar, Istanbul. Credit: CarissimaO via Flickr

Turkey is putting the finishing touches on a plan to loosen rules that govern the import of gold to one of the world’s biggest consumers of the precious metal.

The Treasury is drawing up changes that would allow the certification and standardization of scrap or unregistered gold people may carry when entering Turkey, according to people with knowledge of the matter. It’s working with Borsa Istanbul on the plan that also includes the registration of gold brought without certification from the London Bullion Market Association, said the people, who asked not to be named because the plan is still confidential.

The LBMA is an international trade association setting the standard for the global over-the-counter precious metal market in terms that range from purity and provenance to the way in which bars are traded. Borsa Istanbul, Turkey’s only stock exchange that’s also been overseeing the market for precious metals and diamonds since 2013, is an affiliate member of the LBMA.

Turkey’s Treasury and Borsa Istanbul declined to comment.

For a country that mines a fraction of the gold it needs to meet domestic demand, attracting more of the precious metal from abroad is the only way to sate the needs of jewelers as well as households that have long relied on bullion as a hedge in turbulent times.

Turks traditionally give gold as gifts at events from weddings to circumcision ceremonies, and it’s usually used to pay rent by merchants plying their trade inside Istanbul’s Grand Bazaar, one of the world’s oldest covered markets.

With prices on a tear this year as buyers flocked to gold at a time of trade tensions and worry about the global economy, Turkey’s jewelry industry was one of the few to show an increase in demand for bullion last quarter, according to the World Gold Council. The country refines scrap gold into jewelry sold all over the Middle East.

Overall, Turkey’s gold demand rose 3.7% in the first nine months of 2019 from the same period a year ago.

The Treasury’s plan will enable Turkey to improve compliance across its gold-related legislation and make it consistent with international practice, the people said.

Turkey set up the Istanbul Gold Exchange in 1993, helping local prices move in tandem with international benchmarks. That also imposed international standards on imported bars in terms of fineness. The exchange was abolished later after the establishment of the Precious Metals and Diamond Market in 2013 under Borsa Istanbul.

(By Cagan Koc and Ercan Ersoy)

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