Turkey Is Buying Gold Like There’s No Tomorrow

Secular Investor's picture

In the past few weeks and months we have seen some reports wherein it became clear Germany is actually selling some of its gold on a monthly basis. That’s an interesting phenomenon as it’s weird to see a country secretly repatriating its gold which it starts to sell shortly afterwards.

There’s no doubt it must have been easier to start selling when it was still located in the foreign vaults, and just transfer the cash proceeds back to Berlin or the Bundesbank. But okay, the sales are pretty marginal as Germany ‘dumped’ just 120,000 ounces of gold  in the past three months. A move from 108.6 million ounces to 108.48 million ounces isn’t the end of the world, and definitely doesn’t indicate the start of a trend.

But what did catch our attention (besides obviously the ‘Russian Alliance’ –consisting of Russia, Belarus and Kazakhstan – buying more gold), was the behaviour of Turkey. Not only are the Turks buying more gold at a substantially more aggressive pace than the Russians adding 950,000 ounces of the yellow metal in just three months, the purchases are also much more meaningful when you look at the bigger picture.

In just three months, Turkey has increased its gold reserves by in excess of 7% and that’s a really substantial step for a relatively small country. What makes it even more interesting is the fact Turkey was a huge net seller in 2016 as it sold in excess of 3 million ounces of gold between June and December before increasing its position again (at a rather aggressive pace).

There’s no real explanation for this, and we would be surprised if the Turkish Central Bank was trying to ‘time the market’. As this wouldn’t explain the substantial sales when the gold price lost its momentum in the second half of last year…

As you can see on the previous image, the average weight of the precious metal in the total basket of foreign reserves has also been increasing from January until May (we are still waiting for Turkey to release its June update) has continued to increase in the first few months of the year.

The Turkish timing might be pretty good, as gold has now once again bounced off its lows in the lower-1200 region, and has now moved above its 200 day and 50 day moving average, and this usually is a sign of strength.

Source: stockcharts.com

It now does look like the gold price is ready to attack the $1290-1300 levels again which might be a surprise considering the summer months are traditionally pretty weak for the precious metal. Are we gearing up for a few busy weeks and months? Time will tell!

>>> Read our Guide to Gold right now!

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oncemore's picture

2016 Turkey was probably selling gold, looted in siryan war, what I mean, PM received as payment for weapons and oil, smuggled from ISIS controllrd land.

el buitre's picture

Secular Investor should pay more attention to geopolitics.  Since the CIA failed to take out Erdogan last year, he has no desire to appease them (or NATO for that matter), and he thinks that Russia and China has his back in regards to the Deep State.  So he is dumping his T-Bills while they still can be converted into something of value, namely gold.  Jim Willie claims that the Fed is printing money (CE) like crazy now to sop up all the T-bills that are being dumped by central banks and sovereign wealth funds around the world.  It may be the ESF that is doing it though.  The world is preparing for the scheiss dollar.

Latitude25's picture

So the Turkish government is faking gold reserves just like the West.  What's the average Turk doing if they have money to invest?

. . . _ _ _ . . .'s picture

China told them to.

Wink-wink, nudge-nudge.

missionshk's picture

options are signalling 1290+ by Aug 15

83_vf_1100_c's picture

History is signaling paper gold is due another beatdown.

BandGap's picture

It's not as if Turkey had changed it's political stance during that time, right?

Funny how they are pissing all over Germany diplomatically.  Something big time is going on behind the scenes. Not the only country positioning itself.

1.21 jigawatts's picture

ha ha ha ha ha...Erdogan never heard about how Kikes print & issue ETFs willy-nilly!

Latitude25's picture

New monetary system coming soon?  

Dragon HAwk's picture

Here's an Idea, All weapon  purchases on the planet must be made in Gold.. Buy it or Take it,  either way it's the Weapons that matter..  wish I could say i was Joking...

Albertarocks's picture

"Turkey was a huge net seller in 2016 as it sold in excess of 3 million ounces of gold between June and December before increasing its position again (at a rather aggressive pace). There’s no real explanation for this, and we would..."

Well actually there 'is' an explanation for it.  Turkey decided that they needed more gold, much like China, Russia, India and Brazil.  So they bought some.

BobEore's picture

"Turkey decided that they needed more gold, much like China, Russia, India and Brazil. So they bought some."*...

(*...as in SOME ...qualifications may apply.)

When you trash your national constitution, running things instead via a (now permanent)"state of emergency" which allows for executive degree in place of legislative authority, funny things can happen ...on the way to the (central)Bank.

New -creative- ways to skew statistics, interpret data, or allay the impact of "hard" numbers which are so beloved to accountants and prejudicial to corrupt, neo-liberal regimes the world over, are bound to come into play.

"Buying" gold itself becomes a newly malleable exercise in spin control... the nature of the putative 'shiny metal' matching the new definition of "buying"... or "adding to reserves."

"Reserves" which for several years now have been subject to ever changing interpretations, ever since the adoption of the work of modern alchemy called the "Reserve Option Mechanism" - "ROM." The standard spiel about which can be read in just about every reference to Turkish Central Bank operations:

"The ROM is a mechanism that allows banks to voluntarily hold a certain
proportion of their Turkish lira (TL) reserve requirements in foreign exchange (FX) and/or gold. The amount of FX or gold that can be held per unit of Turkish lira is called the reserve option coefficient (ROC). For example, if the ROC is 2, banks must hold 2 liras worth of FX or gold per 1 TL reserve requirement if they wish to utilize the ROM facility"

the malleability aspect in this case being that the whole "reserve" feature of the material listed in the flow charts and annual reports becomes a notional item the real meaning of which is buried in fine print.

""Gold deposit accounts increased substantially by pulling physical gold into the financial system" says our TCB presenter. They did indeed - right from the moment the new "ROM" policy came into place. But what - inquiring minds would ask ...if there were any such curious persons left in this world of complacent spin - are "gold deposit accounts?"

Several years ago I asked that very same question. And went to considerable effort subsequently to find out the answer. Which relieved me of any further residual naivete about

a) the collusion between state, media and financial interests to LIE about public accounts;

b)the willingness of western scribes to lap up media-driven disinfo served up to achieve the intended effects of (a);

c)the capacity of occidental readers with a direct stake in the fortunes of gold - via their personal investments - to accept the veracity of poorly researched, totally witless articles just like this one, so long as they serve to confirm their own prejudices... at the expense of their own interests. Some things never change.

The two guys who know the most about what I've just talked about are sitting in jail cells in NYC, awaiting a trial which is more than likely never going to happen...

https://storify.com/SuaveBel/gold-for-oil-oil-for-blood-pt-5

particularly if the DUKE OF ORANGE follows thru on the impulse to hand DOJ over to pal Rudy... and Zarrab therefore back to the jihadis. Hey! Come to think of it...that sounds kinda familiar...the collusion of state, media, and financial interests to hornswaggle the lil guy outta their savings.

Wherever you go - in this cruel world - there ya are!