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Lots of considered opinions there - Ash, John and Paul1D. Difficult for me to add much since we've got a Malignant Narcissist in command of our military (for now !) More and more folk (either side of the political divide) are swelling the call for impeachment and imho I really do think Trump is so twisted and bent up that he is going off his trolley with all the "fertilizer" heading his way. He somehow always gravitates to what he sees as powerful totalitarian leaders like Kim Jong-Un, Putin, Orban, Boris Johnson, Xi-Jinping, Netanyahu even....so why not Erdogan? Maybe it's the other way around 'cos he may think he can extract something from them to benefit his family coffers . However right now our media are focussing on the plight of the Kurds who helped defeat ISIS and are now being executed by (questionable?) Turkish Forces......and they are saying it's all Trump's fault for removing US Forces and giving the Turkish military a clear run into Northern Syria. I'm very concerned where this all goes when the UK Parliament is back in business and a new Council of Europe ( or whatever it's officially called) will rule Euroland takes their seats. We'll see how AAU fares soon enough when the stock markets open in a few hours. The and of last week was "manna from heaven" for me when UK bank shares and the value of sterling shot up. That made me "quids in". (lol). Rule Britannia (and Pelosi).
"I also read that Iranian banks no longer have access to the SWIFT system because of sanctions, which restricts international money transfers. "
They have it covered.
"I just hope that this all ends with the downfall of Erdogan and the AKP and some normality returns to Turkey."
The Americans want to place their man Fetullah Gullen in charge of Turkey.
It was the Russians who saved Erdogan from the Coup and gave him the nod before it happened. I just happened to be in Ankara when it happened, Fighter Jets doing low raids on the Parliament and SAMS going off. Then Erdogan came on the TV via Skype telling the Turkish people to take to the streets and that put an end to the coup. Couldnt get my flight back the following day and burnt out cars at the airport. Mind you the coup in 1980 was interesing but a different flavour, but I digress.
Have you read John Perkins and Economic Hitmen?
Ive mentioned on here before Turkey buying those Russian Defence Systems was a strong signal, its could take 12 to 24 months for the response to that unfold.
On a separate note I remember talking to some Turk who had an ancestor or relative who worked in Mosul and they considered that should be a part of Turkey still (ottoman empire) and they have oil fields if Im not mistaken?
There is an Arab Spring due in Turkey maybe, Easter 2020 is squeaky bum time?
Mind you the Turkish military is strong just like the Iranian Revolutionary Guard. Erdogan has purged out all his none supporters after the 2016 coup, how useful was that?
Besides which how many Russians holiday in Turkey compared to Americans? Maybe Turkey will leave NATO, not join the eu and fall in line with Russia but will this result on them losing out to the export market to the eu?
No need for apologies. Trouble with wishing for the downfall of Erdogan is that we don't know who would fill the vacuum. That person may conceivably be worse, for Turkey as a whole and also for our little company. So lets be careful what we wish for! Erdogan was losing popularity in Turkey, if this venture of his proves successful it may just give him a new lease of life, just as Maggie enjoyed post Falklands - by the way I am in no way comparing the two or commenting on my feelings towards Mrs T, I am just observing the effect a successful military intervention can have on the sitting Government.
Hi John, excellent well-balanced post. I was going to post today on the energy risks, but what with watching the rugby and some more research into the potential currency exchange risks, rustling up a steak & kidney pie filling and a couple of hours in the pub, I seem to have run out of time!
If I’m totally honest, my initial thoughts on the currency exchange risks may need some revision. I know the Turkish Central Bank has USD reserves as do other banks, but how these will hold up should the Central Bank continue to intervene in the currency markets to support the lira and sanctions restrict exports and future payments in USD with a requirement to pay for imports of oil and gas, etc in USD, I am not certain right now.
The conversion of TL to USD to repay the loan(s) should not be an issue as the lender can exchange TL for USD, receive loan repayments in USD & maintain the ratio of TL to foreign currency reserves as set out by the Central Bank. The issue may be whether Ariana can exchange all it’s revenue from sales into USD or another currency. Right now there will be options, but the imposition of sanctions will presumably affect this.
I also read that Iranian banks no longer have access to the SWIFT system because of sanctions, which restricts international money transfers. Not the end of the world, if the same thing happens to Turkish banks, it just means that to remit funds back to the U.K. requires a work around.
What with Putin and the Arab League all denouncing the current situation (pot & kettle), it’s all a bloody mess right now and a sensible solution is what is required for the sake of everyone, particularly the people who are suffering right now or who may suffer the consequences of sanctions.
I just hope that this all ends with the downfall of Erdogan and the AKP and some normality returns to Turkey.
Sorry if that’s a bit gloomier than my usual posts, but there it is, warts ‘n’ all.
Good post Ash, as we have come to expect. Subjectively there seems to have been less news coming out about the conflict over the weekend, and no daft tweets off you know who. Turkey is geopolitically important, and I hope for everyones sake the action is limited to the published objectives - if successful the result will be deemed a success for Erdogan, though I have no idea how they will police a following peace since by definition they will be occupying Syrian territory. I just hope restrain is shown by Turkish forces and a pragmatic view taken by the Kurds provided the limited objectives are adhered to.
I suppose there is a currency risk between receipt of payment from the Turkish government, and I don't know what dealing fees they incur when transferring between the 2 currencies.
You just feel, from our investment perspective, on piece of news (or tweet) could have a significant effect either good or bad.
That aside we should receive Q3 production figures, hopefully in 6500 - 7500 range Au.
Evening all, just chilling out with Mrs A and enjoying a glass or two of wine whilst watching the Da Vinci Code (again!),and doing a bit more research.
As John said, thoughts at the moment concern the current situation regarding Turkey's invasion of Syria and I know that it doesn't sit well with some investors. My immediate thoughts are for the innocent people - Kurds, Syrians and Turkish, who will inevitably suffer the consequences of this action and the possible sanctions that may be put in place. It's a bloody mess and I have no idea how it will be resolved, but I hope sense will prevail at some point.
I have been in contact with friends in Turkey, both British expats and Turkish and they are all unhappy with the current situation, but they have never been fans of Erdogan and his Islamist policies as they are counter to the more Western attitudes that prevail on the Aegean and Mediterranean coasts.
I think it is important that we try and put some perspective on events and try and rationalize the situation taking into account the risks to our investment, so I want to try and raise the issue by trying to highlight the risks and encourage some debate. At the end of the day, the market will assess the risks and determine the sp, so this is not an effort to influence anyone - I have no more knowledge of how the sp will react from day to day than anyone else. All I can do is research and share information that may help in your investment decision.
So...firstly to the sale of gold production and the potential risks. The Turkish Govt has first option to purchase gold at prevailing market rates, which they they are currently exercising. Turkey is a net importer of gold - gold reserves increased from 320.69 tonnes in the third quarter of 2019, a record high, from 314.10 tonnes in the second quarter of 2019. Ariana's contribution to this is a mere drop in the ocean, but clearly the policy is in place and sales seem to be assured.
The market price of gold is set in US$, but the price in other currencies rises as they depreciate against the $ so whilst the current market price is not at the record levels of $1900, it has achieved record levels in other currencies, including the Turkish Lira. The fact that Ariana receives TL for it's sales to the Turkish treasury is not an issue as it converts this immediately to US$ to pay the US$ denominated loan and then converts holdings back to TL as required.
That then leads to the subject of currency risk and the ability to exchange TL for US$. I personally believe you only have to read a bit more about Iran and how both the Govt and the people have been able to surmount any issues, whether it be through currency traders, Russia or alternatives. The risk to Turkey is devaluation of TL, but as we know this presents a opportunity benefit to Ariana because contracted costs for the extraction of gold become cheaper.
Running out of space here and could do with some kip, so more tomorrow on energy supplies.