Turkey Gold-Buying Spree Sparks Questions as to Why, How Much
The comments above & below is an edited and abridged synopsis of an article by Bloomberg
Turkey’s central bank is hoarding gold again. Official data show Turkey added 3.8 million ounces of gold worth almost $5 billion to reserves this year. While actual purchases could be much less—the figure is skewed by metal deposited by commercial banks—even if Turkey bought just one-third of the reported amount, it would still rank among the top two or three buyers this year.
While the central bank cited a diversification policy, some analysts speculated the country could be shoring up reserves amid rising tensions between Turkey and its traditional Western allies.
While Turkey has boosted reserves before—holdings more than quadrupled in the 3 years though late 2014—the recent increase comes amid deteriorating relations between the country and nations such as the US and Germany. The central bank also started its latest buying spree as President Erdogan called for Turks to use gold instead of dollars to help stem a drop in the lira.
Ankara this year launched a campaign to get more ‘under-the-pillow’ gold holdings into the formal banking system. The Treasury said it collected 2.47 tonnes of gold last month through sales of gold-based bonds.
Turkey’s gold holding is the 11th-largest by country. Because that includes metal accepted in reserve requirements from commercial lenders, a more realistic estimate of the central bank’s purchases this year would be closer to 1 million ounces.
The other major buyers this year are Russia, which upped reserves by 5.3 million ounces, and Kazakhstan, which added 1 million ounces.