Tehran, Iran – Iran has been importing tonnes of gold up to now few months because it hunkers down for extra hardships beneath the USA’s “maximum pressure” policy.
Iran has turned extra to gold as a secure haven funding for greater than a decade because it weathered endless financial storms exacerbated by sanctions over its nuclear programme and regional affect.
However the authorities of President Masoud Pezeshkian, who took over after an election final summer time within the aftermath of his predecessor’s death in a helicopter crash, has taken it to new ranges within the face of stress from US President Donald Trump.
By January 19, the top of Dey, the tenth month of the Iranian calendar 12 months, Iran had imported at the least 81 metric tonnes of gold bullion, in line with the nation’s customs administration.
This was reportedly greater than 300 p.c greater by way of worth in contrast with the corresponding interval of the earlier 12 months, and 234 p.c extra by way of weight.
In late February, new customs chief Foroud Asgari informed reporters that gold imports earned for exporting items have surpassed 100 tonnes, with out elaborating additional.
That might sign a greater than three-fold enhance in contrast with the 30-tonne whole of the earlier 12 months.
Central financial institution chief Mohammad Reza Farzin claimed in December that 20 p.c of the nation’s international foreign money reserves have been become gold, and Iran possesses one of many highest ratios of gold to international change on the earth.
Mohammad Ali Dehghan Dehnavi, the pinnacle of Iran’s Commerce Promotion Group, stated final month that the nation’s commerce steadiness is once more detrimental this 12 months, however “most of that’s because of the enhance in gold imports”.
Iranian authorities haven’t disclosed the place they imported the gold from, or what they exported to get it.
Some studies have indicated Iran acquired a part of the gold from Russia in change for suicide drones. Iranian officers haven’t commented on the declare, sustaining that they solely exported some drones to Russia months before the start of the Ukraine war.
Gold in all places
The rising give attention to gold has not been restricted to the Iranian authorities, which has additionally been scrambling to plug its budget holes by considerably elevating taxes.
Iranians have lengthy been hedging against their freefalling national currency by buying foreign currency and varied gold merchandise, particularly cash minted by the central financial institution.
Authorities have additionally been closely encouraging gold purchases in current months.
Dozens of providers and functions have sprouted up, with giant public promoting campaigns telling folks they’ll turn their savings into gold for as little because the equal of $1 or much less.
However not all of them have confirmed gold reserves, prompting authorities to periodically warn residents to solely purchase from licensed distributors to keep away from being duped.
Superstition performed in too, with 1000’s queueing in entrance of gold shops final August to purchase primarily based on the assumption that buying gold on the thirteenth day of the Islamic month of Safar would carry success.
These folks, and others who purchased gold this 12 months, are comfortably within the inexperienced as the worth of gold – each pushed by world demand and native upheavals – has risen a lot greater than Iran’s 35 p.c inflation.
The central financial institution has additionally been holding a string of recent gold coin pre-sales, with supply dates of as much as six months. A few of these cash have been offered at greater costs than their intrinsic world worth.
The central financial institution deliberate to situation new gold certificates earlier than the top of the present Iranian calendar 12 months on March 20 as effectively however postponed it to subsequent 12 months.
The financial regulator has not introduced circumstances for issuing the state-backed certificates, solely saying the plan was delayed “contemplating the financial circumstances of the top of the 12 months and the inventory market”.
TEDPIX, the primary inventory market index within the Tehran Inventory Change, reached all-time highs in January however has been present process a extremely risky interval because the US and Israel threaten to bomb Iran and the nation’s financial woes worsen.
What’s behind the gold rush?
After Iran was cut off from the global payment network and located its entry to foreign currency closely constrained, gold was more and more favoured by authorities as a option to lower dependence on the US greenback and to carry belongings with intrinsic worth to make use of as a medium for commerce.
Iran is believed to have flown in most of its imported gold via Tehran’s Imam Khomeini Worldwide Airport to restrict potential logistical challenges linked with transporting giant volumes.
The federal government can also be making an attempt to increase native gold manufacturing within the coming years, because it at the moment performs a comparatively modest position resulting from lacklustre investments in exploration and mining operations.
However whereas the gold technique might yield short-term good points for an financial system beneath immense stress, it has critical limitations in curbing runaway costs.
Economist and market analyst Mehdi Haghbaali informed Al Jazeera that the central financial institution’s gold coin gross sales to the general public are unlikely to be very efficient.
He defined that extreme cash provide development – a major cause behind perennial inflation in Iran – can not absolutely clarify the devaluation of the nationwide foreign money in current months, because it has been intently linked with geopolitical turmoil.
“By promoting gold cash, the central financial institution supposedly tries to sign its confidence and its enormous reserves of international belongings – both in international change or in gold,” he stated.
“However even if that is so, the auctions can be futile. The central financial institution and the federal government’s playing cards are identified to the general public, and the massive fiscal deficit and the forthcoming commerce difficulties beneath the brand new US administration are all very well-known to market gamers. In consequence, irrespective of how a lot gold the central financial institution sells, it can fail to alter public perceptions, thereby having nearly zero impression on the costs.”
Haghbaali stated solely improved macroeconomic and political circumstances might have a significant impression on costs, rendering the gold gross sales “nearly a waste of vitality and assets”.
Lacking gold?
The huge portions of imported gold and the anticipated murkiness surrounding it amid the sanctions have led to extra accusations of wrongdoing.
Yashar Soltani, an impartial Iranian investigative journalist, made headlines final week after he claimed that greater than 61 tonnes of gold had been “lacking” and had not been provided available on the market.
He additionally identified that gold cash are being offered at inflated costs, strengthening longstanding accusations by native politicians and economists towards successive Iranian governments that they manipulate charges to spice up short-term good points.
The central financial institution issued a brief assertion to reject the claims with out elaborating, solely saying that it might pursue a authorized case towards the journalist via the judiciary.
State media rushed to defend the authorities’ gold technique as effectively, with government-run IRNA arguing that it is sensible to promote components of central financial institution gold reserves because it gives fast liquidity beneath sanctions.
