Iran starts requiring central bank approval for gold exports
Wednesday, October 31, 2012
DUBAI -- Iranians can no longer export gold without approval by the central bank, an official was quoted as saying on Wednesday, in a new effort by the government to restrict outflows of wealth.
The move follows media reports on Tuesday that Iran had banned the export of some 50 basic goods, as the country moves to secure supplies of essential items in the face of tightening Western sanctions that have destabilised its currency, the rial.
"The export of gold and coins without permission from the central bank has been banned," said customs official Mohammad Reza Naderi, according to the Mehr news agency.
"According to law, (the export of) coins made from precious metals has until now not needed a permit from the central bank, but current economic conditions have resulted in a decision to require a licence from the central bank for the export of these goods."
Naderi said the new policy was adopted because of exchange rate fluctuations and "challenges in the field of foreign trade," Mehr reported without elaborating.
U.S. and European sanctions against Iran's energy and banking sectors, imposed over its controversial nuclear programme, have slashed its oil revenues, which are the major source of its hard currency supplies.
This has triggered a slide in Iran's rial currency, which has lost about two-thirds of its value against the dollar in the open market over the past 15 months as Iranians have scrambled to convert their savings into dollars and euros.
The government has responded by restricting Iranians' access to hard currency, rationing the dollars it supplies to companies and individuals through the central bank and an official foreign exchange centre.
The restriction on gold exports may be designed to prevent Iranians from switching to gold from hard currencies as a way to move their savings out of the country.
It is not known how much gold may have left Iran this year. The country is not a major gold producer or exporter.
The country's gross official reserves, which include foreign currencies and gold, totalled $106 billion at the end of last year, according to the International Monetary Fund. The government does not disclose their size, but some analysts believe they may have shrunk by several tens of billions of dollars this year because of sanctions.
There are signs Iran is building up its gold reserves as the sanctions have made it hard for Tehran to take payment for its oil through bank transfers. Official data from Turkey, a buyer of Iranian oil, suggests nearly $2 billion of gold was sent to Dubai on behalf of Iranian buyers in August.
Will the German gold clamor ignite gold's skyrocket?
Submitted by cpowell on 07:02AM ET Wednesday, October 31, 2012. Section: Daily Dispatches10a ET Wednesday, October 31, 2012
Dear Friend of GATA and Gold:
Interviewed today by King World News, Bill Haynes of CMI Gold and Silver wonders whether the clamor over the foreign vaulting of Germany's gold and indications that the gold has been used for surreptitious market intervention will be the trigger for an explosion in the gold price. Maybe, but only if buyers take delivery of real metal, not paper, and remove the metal from the clutches of the banking system and governments. An excerpt from the interview with Haynes is posted at the King World News blog here:
Matthew Lynn: German gold clamor shows distrust of central bank market rigging
Submitted by cpowell on 05:41AM ET Wednesday, October 31, 2012. Section: Daily DispatchesWhy Do the Germans Want Their Gold Back?
There's Something Reassuring about Physical Money
By Matthew Lynn
Wednesday, October 31, 2012
LONDON -- Where does Germany keep its gold reserves?
It might sound like a silly question. In Germany, of course. Probably in a very deep vault somewhere in Frankfurt, surrounded by the best security systems that Teutonic technical brilliance can create.
As it turns out, however, that is the wrong answer.
Much of the German gold, the second largest national reserves in the world, is held in New York, London, and Paris. Now there is a campaign under way in Germany to bring the metal back home -- and it is gathering strength all the time.
That tells us three things about the global monetary system, none of them especially reassuring.
The German gold reserves are among the most significant in the world. The country controls 3,396 tons of the stuff. That is a lot less than the United States' 8,133 tons, but then Germany is a smaller country, and it has never had the world's reserve currency. It is a lot more than the 2,451 tons held by the Italians or the 2,435 tons held by the French.
Much of it was built up under the old Bretton Woods system that operated from the end of World War II until 1971. Trade deficits and surpluses were settled by central banks in gold, and since Germany regularly ran big surpluses it ended up with a lot of the metal.
But most of it was not held in Germany itself. Much of it was held abroad, mostly in the U.S., U.K., or France. An estimated 66% is held at the New York Federal Reserve, 21% at the Bank of England, and 8% at the Bank of France. The old West Germany was on the front line of the Cold War and if the Russians had ever invaded, their tanks would have headed straight for the bullion vaults. There was no point in leaving such a tempting target open to attack.
With the Cold War a distant memory, many Germans want the gold returned to their own country. A campaign called "Bring Back Our Gold" has gathered significant support. Politicians and the popular press have jumped on the bandwagon.
Earlier this month the German Court of Auditors demanded that the Bundesbank audit its official gold holdings, and called for the repatriation of 150 tons in the next three years so that its quality can be inspected. As anyone who has ever bought some gold jewelry in a market will know, there are all kinds of tricks that an unscrupulous dealer can get up to -- all that glitters is not necessarily gold.
And while it takes a fairly fevered imagination to speculate that staff at the Federal Reserve or the Bank of England have been nipping down to the vaults and replacing the German gold with some ingots they picked up at a souk in Cairo, the hysteria around the issue is growing so intense an audit is now judged necessary.
The Bundesbank doesn't usually give in to popular pressure -- it is not that kind of institution -- but last week it put out a statement attempting to reassure people the gold was safe and promising to check on the stocks held abroad.
The cargo planes are not quite being loaded yet. But within the next five years, it is a fair bet that some new vaults will be needed in Frankfurt and some space will be going spare in New York and London.
What does the campaign tell us about the state of the global economy? Three things.
1) This generation of Germans is far more assertive about their national interest than their parents were. For 50 years most Germans were anxious to show they were citizens of the world. They dealt with post-war guilt by signing up for every international body available. Now they are quite happy to be citizens of Germany, and to stand up for their own interests.
2) Trust in financial institutions is dwindling all the time. Central banks built up a system of debits and credits because it was easier to move gold around on a ledger than to move it around on trucks. There are few more tempting targets for thieves, after all, than a cargo of ingots.
So it made sense for German gold to be stored elsewhere. But now people no longer trust those systems. They are increasingly unhappy with assets that are simply recorded on a bank's balance sheet somewhere; they want something physical they can see and touch. That is true of national gold reserves, but it is increasingly true of other assets as well.
3) Most importantly, German sentiment is hardening against the single currency with each month that passes. After all, what is a whole vault full of gold in the basement of your central bank good for exactly? Starting a new currency, of course. And, er ... that's about it.
There's nothing else you can do with it. In the most extreme circumstances, if the euro broke down chaotically and national currencies were bought back overnight, one of the key things the foreign exchange markets would look at when putting a value on the new deutschemarks, lira, or francs would be the amount of gold the central bank could back it with. That gold would seem a lot more valuable if it was held in your own country rather than a foreign one.
The campaign to bring back the German gold is in reality a campaign to bring back money that people can trust. The political establishment might not have caught up yet. But popular opinion believes it was sold a dog when it joined the euro, and is already looking forward to the day when it escapes responsibility for endless bailouts of its neighbors.
Yet it is hardly confined to Germany. Distrust of central banks rigging the monetary system is spreading from country to country. There will be many staging posts in the long road back to some form of gold-backed money -- and the German campaign is just the beginning.
Matthew Lynn is a financial journalist based in London. He is the author of "Bust: Greece, the Euro, and the Sovereign Debt Crisis" and he writes adventure thrillers under the name Matt Lynn.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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