Gold is one of the main inputs to the Turkish treasury, and its value is close to half of the foreign reserves of the country's central bank, while the country's production capacity is theoretically about 400 tons per year.
Productivity here includes extracted from the earth and imported ore that is internally manufactured.
Turkish President Recep Tayyip Erdogan announced last January that his country intends to raise its actual production of gold to 100 tons annually within the next five years, and a company announced a month earlier that it had discovered a quantity of gold estimated at 3.5 million ounces. And the value of 6 billion dollars.
Turkey is one of the five major markets in the world, as the gold sector provides job opportunities for 250,000 people working in 18 mines to extract gold ore, and more than 50 major companies.
During 2020, the value of gold imported by Turkey amounted to 26.6 billion dollars, which ranked tenth in the world among importers, while the average annual demand for gold within it was about 160 tons during the last 25 years, while the assets of the Turkish Central Bank reached a peak of 606.6 tons. During last August, before turning back later.
Al-Jazeera Net interviewed the Turkish economist and founding member of the Turkish company "Intel Cut" (ıntelkıt) for data, Tan Haskol about the most important data related to Turkish gold, its market and its investments.
Haskol: Turkey is a large importer of gold, the domestic demand is very large, and the increase in production is still unable to meet this demand (Al-Jazeera)
How do you evaluate gold production in Turkey in terms of quantity, quality and global ranking?
The gold industry differs in its nature from the manufacture of other types of materials, and the main difference lies in the high savings value of the gold ore product at the expense of the manufacturing process, or what is known as "workmanship", and this is unlike other metals.
For example, the market value of a 10-ounce aluminum alloy is about two thousand dollars, but its price after processing and manufacturing becomes $ 2,800, which means that the manufacturing price raises the price of the ore by more than 28%.
But in the case of gold, the situation is different, as the price of an alloy of 10 ounces of gold is about 18 thousand and 222 dollars, and the price of a bracelet made of 10 ounces of pure gold cannot exceed 20 thousand dollars, and therefore the value of workmanship here does not reach 10%. .
For these reasons, the analysis of the qualitative data provided by external parties does not provide an accurate assessment of the reality of the gold industry in Turkey, unlike the quantitative analysis that gives real results.
Returning to the issue of production, it is surprising that the gold industry in Turkey is modern, as the country began producing gold extracted in 2002 by 3 tons, and production steadily increased to become after 10 years only 30 tons, and gold production continued and was not affected by the Corona pandemic, until production reached in 2020 To 42 tons with a value of 2.4 billion dollars, and this puts Turkey in the place between 22 and 26 in the world, and this percentage is increasing annually.
Speaking of import, what is Turkey's position as an importer of gold in terms of quantity, type, and global rank?
Turkey is a large importer of gold, and domestic or domestic demand is very large and the increase in production is still unable to meet the demand, due to several reasons, the most important of which is the continuation of economic growth and its strong performance despite the pandemic, in exchange for the fluctuation and the large movement in the price of the local currency, the lira, which raised demand for Gold and raising its import as a saving material.
Turkey annually imports more than $ 20 billion of gold, and if we exclude the central bank's purchases, we find that more than 60% of the imported gold covers domestic demand.
It is important to realize that storing gold as savings is not a belief in Turkish culture as it is in some countries, such as India, for example, but in recent years it has taken on a character associated with the national feeling of the Turks.
The reluctance of people to save in the Turkish lira due to the fluctuation of its value put them in front of two options: saving in foreign currency or gold, and they chose the second option in order to avoid strengthening the dollar after Washington and its allies imposed sanctions on Turkey.
Former US President Donald Trump tweeted in 2017 about this matter during the financial crisis in which Washington and its allies tried to manipulate the Turkish currency.
Also, do not forget that the policy of the Turkish Central Bank stimulates the purchase of gold, as the bank decided to increase the stock and buy all the gold produced in Turkey, which made it the largest buyer of gold in 2020 among the central banks in the world, and its stock increased by 134.5 tons of gold, equivalent to 7.5 Billions of dollars.
What are the main countries that Turkey imports gold from?
The order of importing countries is a little deceptive when talking about gold, because the direct trade of gold is not constant, but the value of imports of this metal changes from year to year, and sometimes there is import with the aim of exporting.
And the most countries from which Turkey imports gold in a row: Switzerland, which provided 50% of the gold demand in Turkey for 3 years, with a volume of 167 tons annually, then the United Arab Emirates, which supplies 111 tons per year, Australia with 20 tons, South Africa with 13 tons, and Germany with 11 tons. Tons.
In the matter of exports, what global markets does Turkey export to?
How much are the exports and their value?
Turkey is the 17th largest exporter of gold, with a value of $ 5 billion annually, and the largest importers from Turkey are the United Arab Emirates and Britain, which together get an average of 50% of Turkish exports, then the United States, Hong Kong and Switzerland.
It is important here that I realize that Turkey sells gold externally in the form of manufactured jewelry, and does not sell ores, ingots or deposits, as the demand for Turkish gold in the global market is high due to its diversity, moderate prices and high quality.
Turkey is one of the five major markets in the world, where the gold sector provides job opportunities for 250 thousand people (Al-Jazeera)
How much is the gold stock in Turkey and its central bank in global quantity, quality and order?
It is impossible to accurately measure the total stock of gold companies, but the central bank reserve statistics give an idea about the stock, as the bank’s warehouse assets increased from 116 tons to 561 tons during the last four years only, to rank 28 among global banks, but in 2021 it rose to 11th place After it ranked first among the central banks most buying gold, and increased its dependence on gold reserves at the expense of the dollar, after concerns about the effects of the recent US "Katsa" sanctions on Turkey.
What is the size of the activities of companies operating in the field of gold in Turkey?
The main activity in the production of gold in Turkey is for local companies, which produced 42 tons in 2020, and the largest of these companies in a row: Koza Altın, whose production last year was 4 tons of gold, then Tüprag, which produced 3 Tons.
There are other companies such as Demirexport, Pomza and Gübretaş.
The market for gold production in Turkey is open and not monopolistic, and the production of companies in it is close.
Turkey sells gold externally in the form of manufactured jewelry and does not sell ores, ingots, or deposits (Al-Jazeera)
What are the future projects and aspirations in this area?
The gold industry in Turkey is still emerging, studies of this sector are still rudimentary, and the first level of Turkish planning is to cover the growing domestic demand.
We all know that Turkish Energy Minister Fatih Sonmez announced that Turkey had discovered 400 tons of productive gold reserves, in addition to the discovery of 100 tons of gold reserves in the fields of the Gupertac Company, including 65 tons confirmed extraction.
As experts in the field of investment, what are your recommendations and advice for those interested in investing in the field of gold in Turkey?
Cheap workforce, endless demand and new reserves;
Making the country a paradise for gold production these days, we believe that this situation will last at least 10 years, so I advise investors to focus on producing raw materials more than producing jewelry.
As for the market, in Istanbul alone there are great craftsmen and long-standing companies in the field of jewelry and it is not easy to compete with them through the scope of capital that does not give any advantage to foreign investors when it comes to competition in jewelry.
As for the production of raw materials, the opposite is true.
As this sector is capable of development and the size of the capital gives great advantages in competition, it is clear that Turkey is still weak in the field of capital infrastructure and the environment system of gold ores, and foreign investors can benefit from this advantage through direct purchase in licenses, and they can expand local companies As minority investors, or targeting major control over their boards of directors and shares.