US-Iran War: Could ‘Lease Gold’ Cost Iran Big? What an expert warned as Trump steps up economic campaign | Today’s news
Iranians were reportedly warned not to lease/rent their gold to jewelers. The head of the provincial gold and jewelry union told Iranian media that such a practice carries a high risk of losses amid the ongoing war with the United States (US).
What is the “gold for lease” scheme?
According to Iran International, Mohammad Saeed Jafari, head of the Kermanshah Gold and Jewelery Association, told ISNA that under “gold for lease” arrangements, jewelery firms use or trade gold and pay the owner what is described as rent or return.
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Jafari did not specify exactly how the gold is used after it is handed over to the owner. According to the report, such measures may effectively allow jewelers to use gold as part of their business inventory. This could mean that the owner’s gold is not necessarily set aside in its original form.
what is the problem
Jafari said: “We have received numerous complaints. He claimed that in some cases, operators initially paid attractive returns to gain customers’ trust, but later did not return their gold.”
The union boss urged people to avoid similar measures where possible.
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If people still decide to lease their gold, Jafari advised them to get strong documentation and only deal with licensed and established jewelers.
It also warned investors buying molten gold or bullion to avoid online sellers where possible and instead use licensed gold and jewelry businesses, Iran International said.
The US-Iran War and Economic Pressure
Iran is in the grip of a deep economic crisis, with the US launching “Operation Economic Outcast” this month and pressuring the Islamic republic to extract concessions in any future negotiations that six months of conflict have so far failed to secure.
Iran’s economy was already deep in crisis before the conflict, with a cratering currency and spiraling inflation. And now, the months-long war with the US has brought a huge bill to rebuild damaged industry and infrastructure.
Iran’s rial fell to a record low of about 2.2 million to the U.S. dollar this week, while inflation was about 66% in July, according to Iran International.
One senior source told Reuters that Iran only has two more months of gasoline supplies, which must be imported despite domestic oil production due to limited refining capacity.
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In addition, three senior Iranian sources told Reuters last week that the US campaign to strangle Iran’s economy by blocking its oil exports and halting sanctions evasion is becoming increasingly difficult to resist.
Although Iran’s spiritual rulers have managed to evade sanctions for decades, the latest US moves have left them in a much more vulnerable position, with few channels left to secure foreign currency or buy goods, the sources said.
In particular, efforts to prevent Iran from accessing international financial networks in other countries pose a real and pressing threat, the sources said.
Any sign that the economic campaign can break the months-long stalemate in the conflict is likely to cheer US planners, although Iran has also warned it could respond to the pressure with a military escalation, raising the stakes at a key moment.
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The war came to life this week when the US struck along Iran’s Gulf coast, prompting retaliatory Iranian attacks on US bases in Arab states.
Neither side has so far indicated it is ready to make the concessions demanded by the other, leaving the war in a costly stalemate — though it may be shifting.
While more energy flows to international markets through the Strait of Hormuz, despite Iran’s efforts to continue disrupting the sea route, the United States’ blockade of Iranian oil has completely cut off Tehran’s main source of revenue.
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Iran’s rulers are acutely aware of the potential risks of economic collapse and the possibility of reigniting the nationwide mass protests that sparked the killing of thousands of protesters in January.
“They are under very, very strong economic pressure. They are losing control of the straits. It is really a question of whether they will decide to negotiate, and I think they will have to,” Ali Ansari, a professor of modern history at St Andrews University in Scotland, told Reuters.
(With input from agencies)
