Turkey is paying for Iranian oil with gold bars carried over the border.
Since March of this year Turkey has exported $11.7 billion in gold bullion, over 90% of which was carried over the border on its way to Iran or the United Arab Emirates.
What’s happening? Turkey is buying oil. Not with wire transfers or cash, but with gold bullion. They can’t buy Iranian oil through the usual bank channels, because Iran was barred from the Society for Worldwide Interbank Financial Telecommunication back in March, (Swift) making it nearly impossible for Iran to complete large international fund transfers.
Turkey isn’t breaking any embargoes, it is simply completing transaction with an alternative form of money.
Go back a little over 100 years in North America and gold was commonly used in day-to day transactions. In other words, people used gold coins as currency. They bought steamboat tickets with them. They purchased houses with them. They even paid bills with them.
Gold was a legitimate form of currency back then and, as Turkey is demonstrating right now, gold is still a currency today.
That’s the beauty of gold. It’s a wonderful store of wealth, and also a recognized form of cash money. Gold bullion coins are recognized all over the world. It’s a single, global currency.
But – and for gold owners this is often its most important attribute – gold is a currency outside of our highly regulated financial system.
Turkey is using gold to work around one of those regulations. I’m not saying Turkey is right to do this. I’m not trying to make a political point. I’m simply pointing out that gold really is as good as cash in the bank, and can be used to make payments in return for goods or services.
Most assets, whether in the form of investments, land or even rare stamps, have to be converted back into money before they can be spent. Not so with gold, because it already is money.
Add this to the many other reasons why gold is such an effective store of wealth, and you’ll see why more and more people choose to own gold.
It’s real money. It resides and can be used outside of the traditional financial system. It is a classic way to protect your wealth from the ravages of inflation. And, if recent years are anything to go by, it will give you a better return on your money than you’ll get from the stock market.
This is why we choose to protect ourselves by buying and owning gold.
About the author: DH Kenrick is a student of world economics and a committed gold enthusiast. Follow me on Google+
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