ERGIN – March sees ‘unusual’ surge in Swiss-bound gold sales

March sees ‘unusual’ surge in Swiss-bound gold salesTurkey’s gold sales to Switzerland equaled $1.27 billion in March, an extraordinary figure that also triggered overall exports to the country to rise by a factor of more than 20 in the third month of 2014 compared to a year ago, government data showed on Wednesday.The figures were revealed in a Turkish Statistics Institute (TurkStat) report on Turkey’s foreign trade performance. The extraordinary rise in gold sales to Switzerland in March revived arguments of third parties — like Iran — being involved in this trade. This is a possibility, especially when considering Turkey’s recent gold trade ties with Tehran, one of the largest natural gas providers for Turkey. Others, however, said Turkish investors who had piled up huge amounts of gold last year might have opted to liquidate gold assets via Swiss banks amid a fall in demand for gold at home. Turkey imported 302 tons of gold in 2013 in a remarkable surge in purchase of the precious metal as compared to previous years when the country’s average annual gold imports stood between 200 to 250 tons.Calculations with current prices show Turkey’s physical gold sale to Switzerland in March alone totals as large as 30 tons. This is approximately the total amount of Turkey’s annual gold production. Turkey produced 29.5 tons of gold in 2012 and this figure is expected to have increased to 30 tons for 2013 — the official figures have not arrived yet. Turkey’s precious metal exports, which include gold, surged remarkably over the past few years and gold was largely exported to Iran, either directly or indirectly through such markets as the United Arab Emirates and Switzerland. Turkey mostly paid gold for Iranian gas amid Western sanctions on banking transactions with Tehran. The significant rise in gold exports to Switzerland suggests Tehran had started using new routes to channel its Turkish gold imports, analysts argued on Wednesday.Last July, Western powers including the US and the EU prohibited the gold trade as a sanctions violation. A preliminary deal struck in November between Western powers and Iran, however, allowed Iran to resume some gold trading.“This is a huge amount and you cannot explain this with just jewelry sales to Switzerland in March. Obviously there is something weird going on here,” an anonymous market analyst told Today’s Zaman on Wednesday. Turkey’s annual jewelry exports total $2 billion on average, the source said. Iran in the past used to collect Turkish payments in gold for its natural gas sale to Ankara from Dubai. The city still remains a key buyer of Swiss gold. The top five recipients of Swiss gold exports in January this year were in Asia, among them is the United Arab Emirates.The discussions continue amid lingering allegations of large-scale corruption, also linked to Turkey’s gold trade with Iran. A key suspect in a Dec. 17 graft probe, Iranian businessman Reza Zarrab, said earlier this month that he closed out 15 percent of the national current account deficit (CAD). Zarrab, who was detained in the December corruption probe operation and later released pending trial, said that his gold trade with Iran helped contribute some $10 billion to Turkey’s balance of payments and closed out 15 percent of the $65 billion CAD last year.Earlier, Prime Minister Recep Tayyip ErdoIan’s government said there is nothing illegal about Turkey’s gold sales, which Turkey said are carried out by private companies and therefore not subject to sanctions. These private companies include Turkey’s three largest gold exporters — Istanbul Gold Refinery (IAR) and Nadir Metal Rafineri and Atasay, two dealers based in Istanbul’s historical KapalIçarII or Grand Bazaar. In addition to them, Turkish banks, which have been encouraging customers to open a time deposit gold account, also are used by firms to export gold.Gold deposit accounts, which Turkish banks promote through nationally syndicated TV aertisements, typically allow customers to make withdrawals in gold or lira, and offer ultra-low interest rates. According to market expert Mehmet Ali YIldIrImturk, Turkish gold buyers who collected large sums of gold last year may have sold most of their reserve gold to foreign customers via Switzerland. “Turkish gold companies have recently started visiting international trade fairs more frequently than they did and Switzerland was an attractive destination. I imagine that they have made some large gold export deals with global buyers based in Switzerland and the March figures refer to that,” YIldIrImturk explained. Trade deficit at $17.2 bln in first quarter The foreign trade deficit of Turkey was $17.2 billion in the first three months of this year, a 20.9 percent decline when compared to the same quarter of 2012, government data showed on Wednesday. The decline comes from a slowdown in imports while exports enjoyed a rise year-on-year in the first quarter. The TurkStat figures on Wednesday revealed a surge in exports and a decline of imports in the first quarter of 2014 over a year ago. Turkey saw its exports increase by 8.9 percent between January and March this year over the same months of 2013, while the country imported 2.2 percent less in the given period. Turkey sold products overseas worth $40.27 billion and the country’s imports totaled $57.48 billion in the first quarter. In March 2014, Turkey’s foreign trade deficit stood at $7.43 billion, falling sharply by 30.1 percent over the third month of 2013, according to the TurkStat figures. Exports increased by 12.4 percent, totaling $14.74 billion, whereas imports fell by 3 percent, to $19.9 billion in March in comparison with last year’s figures. Turkey’s top four countries for exports last month were Switzerland, Germany, Iraq and the United Kingdom, respectively, while the top four countries for imports were Russia, China, Germany and the United States, in that order. Exports to the European Union increased by 13.5 percent in March over a year ago, hitting $6.08 billion.The Turkish government seeks to curb domestic consumption and increase exports, as the former has contributed to Turkey’s large CAD, which is seen by the government as the primary weak area of the Turkish econom

SOURCE: Todays Zaman