Tehran, Iran – Iran has been importing large quantities of gold in the past few months as it lurks in search of more difficulties under the US “maximum pressure” policy.
Iran has been transformed into gold as a safe haven investment for over a decade as it survived an unending economic storm that was exacerbated by nuclear programmes and sanctions on local impacts.
But President Masuud Pezeschkian’s government, which took over after the election last summer after the death of his predecessor in the helicopter crash, has taken it to a new level in the face of pressure from US President Donald Trump.
Until the end of Dey, the tenth month of Iran’s calendar year, Iran imported at least 81 tons of gold bullion, according to the country’s customs agency.
This was reportedly more than 300% higher in terms of value compared to the corresponding period last year, with 234% more weight.
In late February, Asgari’s new customs director told reporters that the gold imports acquired by imports of exports had exceeded 100 tonnes without further elaboration.
This shows an increase of more than three times compared to the 30 tonnes total of the previous year.
Central bank Mohammad Reza Farzin claimed in December that 20% of the country’s foreign currency reserves had been converted to gold, with Iran owning one of the highest proportions of gold in the world.
Mohammad Ali Dehan Denavi, head of Iran’s trade promotion agency, said last month that the country’s trade balance has been negative again this year, but “most of that is due to an increase in gold imports.”
Iranian authorities have not revealed where they imported the gold from or what they exported to get it.
Several reports show that Iran has obtained some of the money from Russia in exchange for a suicide drone. Iranian officials have not commented on the claims that they claimed they only exported several drones to Russia a few months before the start of the Ukrainian War.
Gold everywhere
The broadening of the focus on gold is not limited to the Iranian government. The Iranian government has been rushing to significantly raise taxes and close the budget hole.
Iranians have long hedged against free-falling foreign currencies by purchasing foreign currency and various gold products, especially coins created by central banks.
Authorities have also greatly encouraged the purchase of gold in recent months.
There are a lot of services and applications happening, and large public ad campaigns tell people that savings can be converted to gold compared to under a dollar.
But not all of them have proven gold reserves, urging authorities to regularly warn citizens to buy only from certified vendors, and to avoid being fooled.
The Superstition also bought it in August last year, with thousands of lines waiting in front of the gold store, based on the belief that buying gold on the 13th day of Safar’s Islamic month would bring welfare.
Those who bought gold this year and others are comfortable in the green as gold, driven by global demand and local upheavals, are far higher than Iran’s 35% inflation.
The central bank also holds a series of new gold coins advance sales with delivery dates of up to six months. Some of these coins are sold at a price higher than their intrinsic global value.
The central bank had planned to issue new gold certificates by the end of the current Iranian calendar year on March 20th, but postponed until next year.
Financial regulators have not announced conditions for issuing state-backed certificates, but say the plan has delayed “in light of the end of the year and the economic situation of the stock market.”
Tedpix, the Tehran Stock Exchange’s leading stock market index, hit an all-time high in January, but has been undergoing a very unstable period as the US and Israel threaten to exacerbate the economic calamity of Iran and the country.
What’s behind the Gold Rush?
After Iran discovered that it was blocked from the global payment network and access to foreign currency was significantly constrained, gold was increasingly preferred by authorities as a way to reduce its dependence on the US dollar and retain intrinsic value assets used as a medium of trade.
It is believed that Iran flew most of its imported gold through Tehran’s Imam Khomeini International Airport to limit the potential logistics challenges associated with mass transport.
The government is also looking to expand local gold production in the coming years. This is because it currently plays a relatively modest role due to lack of investment in exploration and mining operations.
However, while gold strategies can bring short-term economic benefits under massive pressure, there are serious restrictions on keeping runaway prices down.
Economist and market analyst Mehdi Haghbaali told Al Jazeera that central bank gold coin sales are generally ineffective.
He explained that the growth of excess money supply, the main reason behind Iran’s perennial inflation, is closely linked to geopolitical disruption, and it cannot fully explain the devaluation of foreign currency in recent months.
“By selling gold coins, the central bank is likely to try to inform its trust and its vast reserves, either in forex or gold,” he said.
“But even so, auctions are no good. Central bank and government cards are known to the public, and all the huge fiscal deficits under the new US administration and future trade difficulties are all very well known in market players. As a result, no matter how much the central bank is selling, it cannot change public perception and has little impact on prices.”
Haghbaali said that only improved macroeconomic and political conditions could have a meaningful impact on prices, and that the sale of gold was “almost a waste of energy and resources.”
Not enough money?
The vast amount of imported gold and the expected marquines surrounding it amidst sanctions have led to more charges of fraud.
Yashar Soltani, an independent Iranian investigative journalist, made the headline last week after claiming that more than 61 tons of gold was “missing” and not being offered in the market.
He also noted that gold coins are sold at high prices, bolstering long-term accusations by local politicians and economists against successive Iranian governments of manipulating fees to increase short-term profits.
The central bank has issued a short statement to reject the claim, simply saying it would pursue legal cases against journalists through the judiciary.
State media were rushing to protect the authorities’ money strategy. The government-run IRNA argued that it would make sense to sell a portion of the central bank’s gold reserves to provide rapid liquidity under sanctions.