Gold Coin Prices: Eight Steps Forward, One Step Back / Misleading Magnification of the Central Bank's Impact on the Market

In the one-gram gold coin market, the price was 18,578,000 tomans on Mordad 15 and 23,765,000 tomans on Mehr 1. Compared with Mordad 15, the price of this coin has risen by about 7,080,000 tomans, and compared with Mehr 1, it is about 1,895,000 tomans higher.

In the report, Sefir Arjan's website investigated and verified the recent statements of the head of the gold union, who said that "the decrease in the price of gold and coins is due to the foreign exchange policy of the central bank." The report concludes that "this claim cannot be dismissed as false, but we consider [this claim] misleading due to the inconsistency of the reported ounce figure with the reviewed data and the disregard of long-term price trends."

According to Ambassador Arjan, read the full text of this "fact check".

Verdict: misleading. The head of Tehran's gold and jewelry dealers' union attributed the drop in the price of gold and coins in recent days to the foreign exchange policies of the Central Bank and at the same time spoke about the increase in the global price of an ounce of gold. Examining the price trend shows that although the price of gold and coins has decreased in the domestic market, the increase in the global ounce is lower than the announced figure, and the recent drop in prices is not significant compared to the significant growth of the last two months. Therefore, the statement of the head of the union cannot be considered a lie, but the emphasis on the reduction of several days of prices without paying attention to the longer trend of the market presents a misleading picture of the effectiveness of the central bank's currency policy.

Claim: The head of Tehran's gold and jewelry dealers' union has announced that despite the increase of 22 dollars in the world price of an ounce of gold since the beginning of the week, the price of gold and coins has decreased in the domestic market. According to him, the policies of the central bank to reduce the exchange rate have been one of the important factors in the drop in the price of gold and coins in the past days.

Analysis: The trend of global gold ounce price and the rate of gold and coins in the domestic market shows that in recent days, the prices have decreased in the Iranian market. The currency policy of the central bank may have been effective in this process; However, the amount of this decrease is not so impressive compared to the growth of prices over the past two months. In addition, the review of recorded prices shows that the increase of the global ounce since the beginning of the week was less than the figure announced by the head of the union.

According to the announced rates, on Thursday, October 16, 1405, the price of each coin of the new design of the full spring of freedom reached 268 million and 790 thousand tomans. This figure increased to 269,310,000 Tomans on Saturday, October 18, but the downward trend began on Sunday. The price of the coin reached 267 million 255 thousand tomans and 263 million 575 thousand tomans on Sunday and Monday, respectively, and 260 million tomans was reported on Tuesday evening.

In this way, the price of the new design coin decreased by 9 million and 310 thousand tomans from Saturday to Tuesday. This drop compared to Monday's rate was about 3 million 575 thousand tomans. Therefore, the decrease in the price of the coin in the last few days has been significant, but to evaluate its importance, the price trend should be examined in a longer period of time.

A similar trend is observed in the 18 carat gold market. The price of each gram of 18 carat gold was 26 million 307 thousand tomans at the end of last week and reached 26 million 496 thousand tomans on Saturday. This figure decreased to 26 million and 298 thousand tomans on Sunday and reached below 26 million tomans on Monday. On Tuesday evening, the price of each gram of 18 carat gold was reported as 25 million and 658 thousand tomans.

Based on this, the price of each gram of 18 karat gold decreased by 838 thousand tomans from Saturday to Tuesday. This drop confirms the price drop in the domestic market, but it is not enough to evaluate the success rate of the central bank's foreign exchange policy.

In the global market, the figures recorded with the claim of an increase of 22 dollars an ounce from the beginning of the week do not fully comply. The price of gold per ounce was 4195 dollars on Friday and decreased to 4193 dollars on Saturday. On Monday, with a drop of 23 dollars, the price of an ounce reached 4170 dollars; But on Tuesday, with an increase of 16 dollars, it reached 4186 dollars.

Therefore, the price of an ounce has decreased by 7 dollars compared to Saturday, but it has increased by 16 dollars compared to Monday's rate. As a result, the increase of $22 from the beginning of the week does not match the data presented in this review; However, the direction of the price of the ounce has not been the same on different days.

However, limiting the review to the last few days does not provide a complete picture of the developments in the gold market. On the first of October, the price of each coin of the new design was 236,480,000 Tomans. That is, about 23 million and 520 thousand tomans less than the price recorded on Tuesday, October 21. Also, on August 15, the price of each coin reached 185 million and 20 thousand tomans. The comparison of these figures shows that the price of coins increased by about 75 million Tomans between August 15 and Mehr 21.

In the one-gram coin market, the price was 18,578,000 tomans on August 15, and 23,765,000 tomans on the first of Mehr. Based on this, the price of this coin has increased by about 7 million 80 thousand Tomans compared to 15 August and has increased by about 1 million 895 thousand Tomans compared to the first of Mehr.

The global ounce trend is also important in this time frame. The price of an ounce on the first of October was 4284 dollars; It means about 98 dollars more than the rate of 4186 dollars on Tuesday, October 21. On August 15, the price of an ounce was reported at $4,242; A figure that is 56 dollars higher than the rate on 21 Mehr. Therefore, during this period, the global price of gold has decreased, but the price of gold and coins in the domestic market has experienced a significant increase.

This difference should be analyzed according to the two main factors that determine the price of gold in the Iranian market: the world price of an ounce and the exchange rate in the domestic market. The price of gold and coins is not only subject to the fluctuations of the global market; Changes in the dollar rate can also intensify or neutralize the effect of an increase or decrease in ounces. Therefore, the global price of gold may increase, but the decrease in the exchange rate at home will lead to a decrease in the price of gold and coins.

In such a situation, even if the central bank's foreign exchange policy has been effective in the recent reduction of prices, it cannot be concluded from this event alone that this policy has led to a stable achievement in the gold market. Especially since the central bank has spoken about the supply of foreign exchange on a scale of up to two billion dollars, and the evaluation of this policy should also consider the opportunity cost of using foreign exchange resources and the durability of its effect in addition to the several-day price changes.

In the conditions of war and restrictions caused by naval blockades and embargoes, this question becomes more important whether the temporary reduction of prices has created an achievement commensurate with the resources consumed or not.

Conclusion: The reviewed data confirm the decrease in the price of gold and coins in the last few days; Therefore, the main claim of the head of the Tehran Jewelry Dealers Union about the drop in prices is not false. However, the global ounce increase figure since the beginning of the week is not consistent with the data presented. More importantly, focusing on the multi-day drop in prices without mentioning the significant growth in the coin's price over the past two months can create an exaggerated picture of the effectiveness of the central bank's foreign exchange policy.

In a situation where the price of the new design coin has increased by about 75 million Tomans from August 15 to 21 Mehr and the price of a one-gram coin has also increased by more than 7 million Tomans in the same period, the recent price reduction alone is not considered a decisive achievement. Also, in order to judge the justification of currency supply up to two billion dollars, the stability of price reduction and the opportunity cost of using currency resources should also be examined.

All in all, this claim cannot be considered a lie, but we consider it misleading due to the inconsistency of the announced figure about the ounce with the reviewed data and ignoring the long-term price trend.