The Central Bank of Iran’s monopoly over minting gold coins should be blamed for shortages in the bullion market, a vice president of the Tehran Gold and Jewelry Union said.
“Due to monopoly over the supply of gold coins and long delays in the sale of coins by the CBI, demand has outweighed supply,” Mohammad Kashti-Aray said in a talk with the news portal of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA).
The gold expert noted that strained supplies had given rise to price bubbles in the precious metal market, otaghiranonline.ir reported.
CBI is in charge of minting gold coins, Kashti-Aray said, adding that the top bank stopped minting in 2018.
This is the first time an official has publicly said that the central bank had halted its gold coin minting operations. It is not known why.
“Currently, in the market only gold coins in people’s hands are exchanged. It is obvious that this is simply not enough to meet demand,” he said.
Like any other market, he said, the bullion market is the function of demand and supply beside other key factors, namely forex rates.
When there is no new supply and demand is rising due to a plethora of economic and non-economic factors, prices will rise beyond the real value of gold, he said
Kashti-Aray recalled that price bubbles exist mainly in gold coins while gold jewelry is traded at real prices “because there is sufficient amount of gold in the market (for making ornaments) and import is also possible.”
“Based on gold prices in international markets and the rate of 315,000 rials to the dollar in the unofficial market, one gram of 18-karat gold is now worth 13.9 million rials in Iran,” he said, reiterating that this price is “real and there is no bubble.”
With this currency rate, he noted that the benchmark Emami gold coin is traded 21 million rials above its real value. This coin is currently sold at 151.82 million rials.
