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GOLD IN IRAQI KURDISTAN

The Kurdish people have traditions in buying and using gold that are the same as the Indians of the sub-continent: the yellow metal forms an integral part of their marriage customs. Last year about 17 tons of gold were imported into Kurdistan, according to the Directorate for the quality control of gold in the Kurdistan region. The bulk of the gold imports came from Turkey and the United Arab Emirates, and this suggests that it was largely in the form of jewellery, essential for weddings.

However, this statistic for 2011 compares less favourably than the imports for 2010, which were more than 23 tons. By May 2011, the price of 21 carat gold had crept up from 228,000 dinars ($195 or £123) per ounce to 255,000 dinars ($218 or £138) per ounce. A consequence was that brides, who were the only people buying gold in 2011 (everyone else was selling), had dropped the amount purchased from about 50 ounces in 2009 to around 20 ounces in 2011.The rise in price has been attributed to the fall of the value of the dollar, encouraging more and more people in Kurdistan to move out of the dollar and into gold, with the consequence that prices were pushed up until only those intending to get married were purchasing it.

Another likely candidate for the rise in price, and increasingly so as the recent gold rush in Europe has proved, is the eurocrisis which has sent the price rocketing with no end in sight to its trajectory.

A custom in Kurdistan is to arrange for hundreds of marriages to take place on the same day; because of the organisation required, couples register with the agencies that arrange this in advance only to find that they have to postpone their weddings. The Kurdistan Regional Government had established a marriage loan for government employees, but because of the crisis caused by the rising price of gold, decided last year to extend the loans to all.

Gold and Oil Resources in Iraqi Kurdistan

Iraqi Kurdistan has had an annual growth rate of about 10%, which is similar to India’s, though Kurdistan has a much smaller population of course, around 4 million. This was spurred by the no-fly zone policy carried out by the RAF and USAF between 1992 and 2003. The main impact of this policy was to facilitate the development of Kurdistan’s oil fields: reserves are estimated at 45 billion barrels of oil, extraction of which was begun in 2007. There is so much oil that the revenue from it pays for infrastructure and there are no taxes.

A downside to the oil wealth is that although Kurdistan has gold deposits these are not mined because no one sees the point.
That may change of course with the rising price of gold – and the observation that the Iranian government is facilitating gold exploration in the neighbouring Iranian Kurdish province, one of the projects being in conjunction with Rio Tinto. More on this development in a later article.

by Mark Rogers

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Thoughts
"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."