Failed Banking System Prompts Iraqis to Hoard Gold

The entry of such massive amounts of gold into the country is offset by the exit of large amounts of foreign currency, in particular US dollars, in which gold traders often deal. Aziz noted, "During the past six months, nearly $1.5 billion has left the region to purchase these tons of gold." He continued, "In addition, more than $100 million is being paid to gold factories outside the country, given that jewelers in Iraq pay approximately $2 per gram to convert raw gold into gold for decoration."

Aziz confirmed that the gold that reaches Iraq through the Kurdistan Region's airports is crafted for jewelry and ready for sale, and thus does not need refashioning. He offered, "There are currently about 120 gold-crafting shops in the Kurdistan Region, yet they can only meet about 10–15% of domestic market demand. This level of production is weak compared to the existing demand."

Regarding the reason the region has not built large factories to convert gold ore into gold for decoration, Aziz said, "This process requires joint work between businessmen, chambers of commerce and the government to encourage the building of factories and production facilities for gold in the region. [Such projects] require large amounts of money and substantial financial support." He added, "If there were large factories and production facilities in the Kurdistan Region, they would also provide about 6,000-7,000 jobs for citizens."

Aziz stressed, "The reason citizens are buying gold in such large quantities is the lack of a strong banking sector in the region." He continued, "Given the weak banking sector in the region, as well as the lack of a market for securities, stocks and bonds, citizens have no options for storing and saving money other than buying gold and keeping it in their homes."

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