The Turkish Lira is crashing, and geo-political tensions are heating up very quickly. Gold BTFDers may want to rethink that strategy from here…
The World Gold Council shows Turkey increasing their gold reserves since 2011:
The chart above is very significant. Turkey has been increasing it’s gold reserves. But not only that, they have increased their reserves rather significantly, and, besides a slight dip into the end of 2016, Turkey is once again a buyer.
Not only that, but perhaps even more aggressive is not just with total number of gold reserves, but gold reserves as a percentage of total reserve holdings:
Sure, the numbers may or may not be accurate. Coming from the WGC, it is safe to say they are not completely accurate. However, accuracy is not needed to see the larger trend here. Turkey is fleeing the US dollar.
This is important because we hear about China and Russia, and to a lesser extent, Turkey, but it is still significant. It is especially significant because the Lira is crashing:
Now this is coming off of the heels of a State Department travel warning at the end of September:
Since the travel warning, Turkey has been arresting Americans at the US Consulate in Istanbul:
A second custody decision was made at the US Consulate General in Istanbul. The employee, his wife and son were taken into custody, who did not leave the consulate. On the other hand, it was learned that Bass about these developments wanted to meet with Minister Gul, but this request was rejected..
Things are now heating up even further. ABC is reporting that US and Turkey suspend bilateral non-immigrant visa services today:
The U.S. said Sunday it was suspending non-immigrant visa services at its diplomatic facilities in Turkey following the arrest of a consulate employee, prompting Turkey to halt visa services in the U.S.
The U.S. Embassy in the capital of Ankara tweeted a statement from the U.S. Mission to Turkey saying that recent events have forced it to “reassess the commitment of the Government of Turkey to the security of U.S. Mission facilities and personnel.”
The Turkish Embassy in Washington responded with a similar statement on Twitter late Sunday and said it would “reassess the commitment of the Government of the United States to the security of Turkish mission facilities and personnel.” It said the measures would apply to e-Visas, visas issued at borders and visas in passports.
So here is the crux of the matter.
- The Turkish Lira is crashing.
- Turkey diplomatic relationships are spoiling faster than a gallon of milk left left inside a car in the hot Texas August sun.
- The Turks are rapidly loosing their purchasing power, in relation to the dollar and whenever they have to conduct business in dollars.
Which brings us to this question:
Where is a Turk to put his or her devaluing fiat currency?
Seems unlikely the decision will be in US Treasuries.
NOT probably nothing…