We’ve seen Venezuela, Austria, Germany, Hungry, and the Netherlands all repatriate their physical gold lately. According to the latest Fed data, gold stored at the NY Fed has dropped to a record low of 7,819 tons. 15.5 tons withdrawn between Jan-Feb 2018 alone. And the gold keeps leaving.
As of this morning we can add Turkey to the list. Turkey’s Yeni Safak reports that their government has decided to bring home the gold, and deliver it to the Istanbul Stock Exchange. This isn’t the first time Turkey has asked. In recent years they have brought home over 220 tons of gold previously stored abroad.
Turkey’s gold reserves are estimated at 591 tons, worth just over $23 billion. This makes Ankara the 11th largest gold holder in the world.
This gold repatriation comes during a critical time for the lira, Turkey’s currency. The lira has fallen against the dollar and euro lately, and Turkey has experienced double digit inflation because of it. The Turkish central bank has so far refused to raise rates. Higher rates typically bring the value of currency higher as investors seek return. Seems Turkey has abandoned modern methods of supporting a falling currency.
Meanwhile, president Erdogan has taken stance against US Dollars. “Why do we make all loans in dollars? Let’s use another currency. I suggest that the loans should be made based on gold!“ Erdoğan said during a speech at the Global Entrepreneurship Congress in Istanbul on April 16, according to Hurriyet. Erdogan added that “with the dollar the world is always under exchange rate pressure. We should save states and nations from this exchange rate pressure. Gold has never been a tool of oppression throughout history.”
Erdogan may have plans to launch gold-backed currency once all the gold is back home. A gold standard makes prudent sense. Having a stable currency is critical to commerce. Gold is well distributed and traded throughout the world. The value is historically stable. Turkey may be able to focus on more important things once it has a stable currency.