Iran joins the gold bugs to fight 25% inflation and sanctions
Posted on 10 June 2008 with no comments from readers
Gold has some unusual friends but has not previously counted the Islamic Republic of Iran among them. Times change and with 25 per cent inflation a gold hedge for part of Iran’s $80 billion reserves looks logical.
Mohsen Talaie, the deputy foreign minister in charge of economic affairs, told Iran’s Etemad-e Melli newspaper: ‘Upon the decision of the government’s task force a segment of Iran’s foreign exchange assets will be converted into real assets such as gold and stocks.’
His statement came as Europe is planning to freeze the assets of Iran’s biggest bank Melli, said Ambrose Evans-Pritchard in today’s Telegraph blog. A draft communique for the EU-US summit on Thursday confirms that Europe is ready to join the crack down on Ahmadinejad, he added.
Therefore a timely diversification into the yellow metal is called for and probably more a geopolitical move than a hedge against inflation.
Iran has recently stated that it expects oil to hit $150 a barrel very soon, and given black gold’s 90 per cent correlation with yellow gold since 2000, this is probably an excellent moment to be buying.
Last week’s remarks from an Israeli cabinet minister that an attack on Iranian nuclear facilities might be unavoidable sent gold prices back above $900 and oil to $139.
Today more hints about US interest rate rises from Ben Bernanke sent gold back down again but then he managed to do the same last week before being trumped by his euro counterpart Jean Paul Trichet. Ball to Mr Trichet?
