Turks turn to gold smugglers in a desperate attempt to preserve what savings they still have

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The extreme demand for the precious metal has resulted in a price premium that is 7% above international spot prices, or $5,000 per kilogram, which Crow said is drawing in individuals looking to make a quick profit, as well as organized crime. “The government's quota system for bullion imports, aimed at narrowing the current account deficit, has further exacerbated the supply squeeze, pushing local premiums higher,” Crow wrote. “Despite these restrictions, demand remains strong, fueled by negative real interest rates, persistent inflation, and political uncertainty.”

But according to Mehmet Ali Yildirimturk, Vice-President of the Istanbul Jewelers, Goldsmiths, and Moneychangers Association, even this ramped-up domestic production can’t meet local demand. “Turkey's gold imports have slumped for the fourth consecutive month due to government restrictions, despite domestic demand soaring, as reflected in the disparity between local and international gold prices,” the article noted. “The ongoing monetary policy tightening and the state-imposed quota on gold imports are attempts to stabilize the economy, but they also highlight the challenges of managing demand for gold as a traditional safe-haven asset.

Source: Financial Digest (financialdigest.net)

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