No Crisis for Turkish Gold: Potential for D-8 Cooperation

Istanbul, Turkey | November 28, 2008 by D-8 Secretariat

Gold as important investment

Jeremy Charles, the global head of precious metals for HSBC, spoke with the Turkish English Newspaper, Today’s Zaman, briefly about the status of the gold market ahead of the Active ACADEMY 1st International Gold Summit being held today in İstanbul.

In the interview, Charles drew attention to İstanbul’s centuries-old status as an important center for gold and called it “natural” for there to be increased interest in the physical gold market at a time of global financial turmoil. “Investors have historically turned to gold in times of financial uncertainty,” he said. “Gold has shown real strength during the financial crisis as investors search for safety.”

The veteran trader, who has over a quarter century of experience in the market, emphasized the importance of the timing of the İstanbul conference: “It is important to gather at a time of turmoil for understanding the financial situation and forecasting about the future. Dialogue, understanding and education can all be applied to ensure the further development of the local market here.”

Jeremy Charles

Charles also shared his predictions with regard to the trajectory of the gold market, predicting volatility for the next five years: “My personal belief is that gold prices will continue to be volatile albeit within a higher trending range. Difficulty of extraction coupled with growing global demand is likely to keep prices relatively high for the foreseeable future.”

However, he was optimistic about the continuation of demand for gold despite the crisis that has enveloped world markets, causing recessions and gloomy outlooks for economy after economy. “Even [though] the trends in retail investment demand and jewelry demand differ significantly from market to market by concerns over the general economic climate, inflation and stock market falls, I do not expect demand to decrease,” he said.

The reason for his optimism is gold’s versatility. “Gold is many things to many people, from being a luxury good in one country to the most important investment in another. Since the start of the current turmoil there is considerable evidence to suggest that demand for gold will continue in one form or another,” Charles said.

The executive also thinks people will continue to purchase gold as a vehicle for storing their wealth. “I believe this will always be the case. Investors intend to buy gold for its safe-haven qualities. Those who traditionally have shied away from gold as part of an investment portfolio can no longer afford to ignore this unique asset. I think the institutional investors and private banks in particular will all be reconsidering their strategy. My belief is they are likely to want to own some gold again.”

The increase in the price of gold will not deter consumers from buying gold, either, even if their money cannot purchase as much as in the past, he said. “Despite the continued high and volatile gold price, together with economies across the globe witnessing inflationary pressures and a tightening of consumer wallets, consumers are continuing to spend more money on gold, even if they no longer get as much of it. This reinforces the positive attitude and buying intentions of consumers, and indicates that, despite price increases, gold demand remains robust.”

Charles is also chairman of the London Bullion Market Association and will be a keynote speaker at the İstanbul summit.

Responding to the news, D-8 Director, Amb. Kia Tabatabaee said that Turkey is doubtlessly a very active player of D-8 organization and its status as the important center for gold market has further show signs of resistance toward global financial crisis. He brought to mind that Turkish precious stones’ big player such as Goldaş, currently exports to 48 countries and has determined for expansion to continental and eastern Europe as primary growth areas for the next three years.

“Development such as this hopefully will encourage more similar expansion by other companies of D-8 countries to reach the global economic player status within their sectors,” Tabatabaee said. D-8 is very keen in supporting efforts by its member countries to intensify business expansion among D-8, through a set of agreements to ensure smooth facilitation in boosting the intra-trade.

“We believe that once D-8 has put Preferential Trade Agreement, Visa Agreement, Custom Agreement, and other trade facilitations in place soon, joint investment and investment by private sectors will significantly increased within D-8 countries,” he said in his office on Thursday.

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