Smuggled gold entering Turkey nears 50 tons in one year, industry says
The gold industry has raised concerns over the rising amounts of gold smuggled into Turkey, following a significant decline in formally imported gold compared to long-term averages. As of the end of September 2024, the amount of gold imported into Turkey stood at 88 tons, significantly lower than the 30-year average of 132 tons for the same period, leaving a gap of 44 tons, according to Mustafa Atayık, the Chair of the Istanbul Jewelers Association.
“Since our sector continues to work and produce despite all the troubles, where does the difference of 44 tons come from? We leave the answer to you,” Atayık told the online news outlet Ekonomim.
Since the implementation of import quotas on gold last year, there have been claims that this has led to an increase in smuggling, with a price difference exceeding $5,000 per kilogram compared to international markets. Industry representatives argue that this price gap has accelerated the flow of smuggled gold into the country.
According to data from the Trade Ministry, in the January-October period this year, 2.5 billion Turkish liras ($72.2M) worth of smuggled gold was intercepted at the borders while attempting to enter Turkey.
Recently, three MPs from the ruling coalition partner Nationalist Movement Party (MHP) resigned amidst allegations tied to a gold smuggling investigation. In an anti-smuggling operation at Istanbul Airport, seven people including security officers were also arrested.
Gold and currency markets expert Mehmet Ali Yıldırımtürk also questioned the transparency of the formal gold import process, stating, "You are importing 12 tons of gold monthly, but who is receiving how much? Why are some bringing in small amounts while others bring in much larger quantities? The details should be revealed with a list."
Regarding the scale of smuggling, Yıldırımtürk stated that the annual demand for gold is between 250-300 tons and suggested that smuggled gold could be determined from the difference between the legally imported gold and actual need.
Meanwhile, Atayık, Chair of the Istanbul Jewelers Association, pointing to the increasing risk of low-quality gold circulating due to the uncertain origin and purity of smuggled gold, stated, "Poorly refined gold bars need to be reprocessed. This leads to the reintroduction of scrap metal during production, causing a 60-70% increase in costs."
According to the Borsa Istanbul's Precious Metals Market data, gold imports rose to 264 tons in 2022 and 318 tons in 2023.
In 2023, the government set a monthly quota of 12 tons for unprocessed gold imports, citing the negative impact of the increase in gold imports on the current account balance.
Mustafa Kamar, President of the Association of Jewelry Manufacturers and Exporters (TÜİD), stated that the increase in gold imports over the past five years was driven by demand from the Central Bank and citizens.
He said, "As household demand rises, the price difference increases, leading to smuggling. The real loss is borne by the public."
Kamar also noted that with an annual smuggling risk of 44 tons, equivalent to approximately $4 billion, "A five percent price difference in the international market means smugglers make $200 billion. The public pays for the money earned by smugglers."
Source: https://www.duvarenglish.com