Turkey's Gold Market

Turkey is incredibly relevant in the bullion industry, and its role in the gold market is significant. Like Russia, Turkey also shares borders with both Asia and Europe. Thus, it is safe to say Turkey plays an important role in the gold industry, particularly in the European precious metals market.

Perhaps Turkey is most known for its role in the gold jewellery industry, however, the country also boasts huge refining companies and capacities, and acts as a major hub for bullion being exported from Africa to be refined.

The History of Turkish Gold

With an ancient history as an empire dating back to the 14th century, Turkish culture revolves around gold. The earliest records of gold discovered in Turkey date to as early as 9000 BC. Jewellery made from gold from the region dates back to as early as 3000 BC, however it wasn't until later, at around 650 BC, that the region began to use gold to make coins for currency. The first coins were said to have been minted in Lydia (modern-day Turkey) around 650 B.C. In 1844 the Turkish Lira gold coin was established to replace the 100 Kurush coins in circulation since 1688.

The Turkish Gold Market

Turkey's gold industry is primarily defined by its jewellery industry. And in Turkey, gold is invested in by way of jewellery. Turkey is the 4th largest gold-consuming nation in the world, and the country alone accounts for almost 6% of global gold consumption.

Despite sharing borders with Europe and Asia, Turkish gold is always reflected as being part of the European gold market. The gold market in Turkey was first deregulated in 1993 following governmental changes, which opened up the country for increased bullion trade. Before the deregulation, only the Central Bank of Turkey had the authorization to import gold into the nation. One of the prime goals of the Turkish gold market deregulation was to open up the international gold trade by allowing other organizational bodies to import gold. As a result, the gold market began to flourish, particularly in the jewelry sector.

The Istanbul Gold Exchange, known today as the Istanbul Precious Metals Market (IPMM), opened its operations in 1995 and offered both futures and and spot price trading. Four years later, Turkish silver and platinum were also added, while palladium was included in 2012. Turkey's primary bullion trading partners are Switzerland and United Arab Emirates (UAE), followed closely by South Africa (predominantly for imports). Turkey's domestic demand for gold is significant, and it significantly greater than the country's production of gold annually. Therefore, the reason the Turkey has significant gold import partners is to keep up with the country's domestic demand.

Turkish Bullion Refining

There are two major bullion refineries operating in Turkey which meet international bullion standards set by the LBMA or the Comex.

1. Istanbul Gold Refinery

Istanbul Gold Refinery was initially set up in 1996, although its main refining plant was not opened until 2004. The company refines gold, silver, platinum, palladium and rhodium, and was the first refinery in Turkey to be approved by the Dubai Multi Commodities Exchange for the quality of its products. The refinery became a member of the Dubai Multi Commodities Exchange in 2007, and of the London Bullion Market Association in 2011. IGR manufactures bullion bars for both retail investors and for commercial use.

2. Nadir Metal Refinery

Nadir Trading, the parent company of Nadir Metal Refining, was born out of the Grand Bazaar in Istanbul in 1985, and by 1993, Nadir Refining was formed. In 1999, Nadir Refining paired with Degussa SA, one of Germany's largest precious metals refineries, in order to assist with the development of the refining business, and to ensure that an international standard of quality was met. The company is accredited by the London Bullion Market Association for its gold and silver products, and its products were approved by the COMEX in 2020. The company is also a member of the Singapore Bullion Market Association.

Turkish Government Bullion Reserves

Turkey's gold reserves remained relatively flat, increasing from only 3.3 to 7.3 billion dollars in value from 1980 until 1990. However, in 1990 the country began a concentrated program on increasing its reserves. From 1990 onward, Turkish gold reserves continued to increase in quantity and value, peaking in 2013 and again in 2019. As of mid-2022, Turkey's gold reserves stood at approximately 457.7 Tonnes, with a value of around 24 billion USD. However, it is important to remember that Turkey has initiated several programs to borrow gold, and this borrowed gold is included in their calculations of reserves. Therefore, the actual owned amount of gold that Turkey has is much smaller than what they state.

Turkish Quarterly Gold Reserves

Turkey's buildup of reserves was curtailed significantly starting in 2018, when the country hit a period of exceptional inflation and economic uncertainty. In order to try to stabilize the Turkish Lira, the government of Turkey sold off a significant portion of their gold reserves, and ended up r.

Conclusion

Investment in the Turkish gold market can be highly beneficial, especially for those looking to reap the returns of the jewelry sector. Their sizable gold market is an integral part of the economy. From mining and refining to an active gold import and export trade, the Turkish gold market is a standard of an economy that prioritizes the precious yellow metal.