Gold imports and exports between Turkey and UAE mystifying to many. Dunya newspaper’s economist Alaattin Aktaş wrote about the gold trade between the two countries in Turkey on Monday and stated UAE’s role in gold trade with Turkey is yet to be understood:
Let’s start first with the current status. Turkey exported $2.6 billion worth of gold in first 4 months of this year. Its gold import within the same time frame exceeded $3.8 billion.
The level of export within 4 months is below the same period of 2015 and 2016 and almost similar to that of 2014.
Actual activity is really in imports. Between January and April, the import was around $1.2 billion in 2014, $843 million in 2015 and $1.1 billion in last year whereas it reached to $3.8 billion this year, resulting in a dramatic increase. This year’s result indeed follows a record of $5.3 billion in 2013.
Namely, the export is very stable, but the import has seen a significant increase. If this trend holds throughout the year, the gold import is likely to reach $10 billion level.
UAE is in the lead
In gold export and import there is a subject that we touched upon earlier. United Arab Emirates (UAE) takes the considerably big chunk of the gold trade volume this year. 85% of the $2.6 billion worth of gold export was done with UAE. Her share in import was also close to 50%.
Let’s now look at this from another perspective. Turkey exported $3.6 billion worth of gold to UAE in 1st four months of this year. This alone constitutes 61% of total export volume.
Almost everything imported from UAE is comprised of gold. There was an import of $2.1 billion from UAE between January and April, of which $1.9 billion was gold. According to these numbers, our imports from UAE other than gold was about $187 million.
Export-Import balance
It is quite normal to import huge amount of gold or any other commodity from a country. This commodity can be packaged and sold to another country. However, how one can explain when a commodity, gold bullion in this case, is imported from UAE and then exported back to UAE (or first export, then import)… On top of it, this happens within the same month. It is not like you purchase it this month and sell it back in next month or vice versa. All transactions take place within the same month.
It is not normal for Turkey to export gold bullion. Since we are not a gold producer, we can export gold which we imported at some point, by adding some profit on it; this is only plausible scenario. But when the gold is exported to the same country with very small profit margin compared to its import price within the same month, one needs to question how this trade make sense.
Source: https://washingtonhattius.com/2017/06/20/uaes-role-gold-trade-turkey-yet-understood/