Kyrgyzstan’s Gold Transactions: A Closer Look at the Sale of 9.9 Tons Since the Start of the Year

A recent report by the National Statistical Committee revealed that Kyrgyzstan exported 9.9 tons of gold during the first nine months of this year, equating to $619.7 million. This figure shows a staggering increase compared to the results from the same period last year, when the nation’s exports totaled just 69.4 kilograms of gold, equating to $905,600. In one month alone this year, Kyrgyzstan sold 1.2 tons of gold, topping last year’s nine-month total.

As the top gold refinery hub in the world, Switzerland was Kyrgyzstan’s top importer during the nine-month period, accounting for $502.8 million in gold purchases. During eight months of this year, Switzerland purchased 7.1 tons of gold from Kyrgyzstan. In one month alone, Kyrgyzstan shipped over 882 kilograms of gold to Switzerland.

Other major buyers were Hong Kong and the United Arab Emirates. Hong Kong purchased 984.3 kilograms of gold from Kyrgyzstan at a healthy price of $60 million during the period in question.

Interestingly enough, Hong Kong became a major gold buyer on Russia’s list during the first eight months of 2023 as well. Typically, Dubai imports the most gold from Russia, though tides shifted earlier this year when Hong Kong took over the reins. During the first eight months of 2023, Hong Kong imported $2.3 billion worth of gold from Russia, reflecting a $1.9 billion increase from the same period last year.

In total, Hong Kong imported 68 tons of gold from Russia between January and August of this year. When including its gold imports from Switzerland, that total nearly reaches 69 tons.

The Hong Kong dollar has recently experienced solid strength, achieving a trading range of 7.75 to 7.85 against the U.S. dollar. This newfound value makes it more appealing for gold dealers like Russia or Kyrgyzstan to choose Hong Kong over options like the UAE’s dirham.

Even still, Kyrgyzstan exported 908.8 kilograms of gold to the United Arab Emirates, valued at $56.7 million. Russia did not export nearly as much gold to the UAE this year, likely because of increased Western sanctions imposed on Russia and the stricter policies on gold refineries in the UAE, making transactions between the two lucrative forces more complex.

Last year, the majority of Kyrgyzstan’s gold exports went to Turkey, which did not purchase any gold from Kyrgyzstan this year. Turkey often flip-flops between buying and selling gold depending on the nation’s current economic state. Right now, Turkey is in a selling stage due to soaring inflation rates, weakening currency concerns, and a natural disaster that occurred earlier this year.

Turkey officially suspended gold imports in February following a catastrophic magnitude 7.9 earthquake that killed tens of thousands. Just a month before this, Turkey had imported $5.1 billion worth of gold, though it quickly reversed this trend to make up for the nation’s massive $48.8 billion+ debt.

When Turkey eventually handles its domestic affairs, it will likely return to importing gold from Kyrgyzstan. Even without Turkey’s support, Kyrgyzstan has achieved phenomenal gold export rates this year. So, where does Kyrgyzstan source this gold from?

Kyrgyzstan is home to the Kumtor Gold Mine, one of the largest gold mining operations in Central Asia and the second-highest in the world at 13,000 feet. The Kumtor Gold Mine came into production in 1997 and has since produced over 13.8 million ounces of gold as of the latest data released in June 2022.

On average, the Kumtor Gold Mine produces 550,000 ounces of gold per year. The Kumtor Gold Mine is a critical aspect of Kyrgyzstan’s infrastructure, yielding the nation’s premier export resource while also employing over 4,400 individuals. Gold is the nation’s largest resource, accounting for 12% of Kyrgyzstan’s total exports.

Unfortunately, the mine was recently involved in a series of legal disputes with Canada-based Centerra Gold over how to share its ownership. Kyrgyzstan ultimately released 26% of its ownership in May 2021. The dispute continued for over a year until Centerra released the shares, handing over the rest of the assets back to Kyrgyzstan.

Despite these effects, the nation is still successfully enjoying high export rates, as seen in the first eight months of 2023. Kyrgyzstan provides critical support to the greater gold trading industry, with numerous nations relying on its exceptional export levels. Moving into 2024, we can likely expect Kyrgyzstan to continue exceeding its gold production rates.

As always, investors should consult their financial advisors before making any portfolio decisions.

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