By Geena Paul
LONDON (Commodity Online): Even as the world is watching Iran with suspicion over its nuclear ambitions, Tehran is harbouring plans to tackle the US pressure through gold.

Otherwise, how will you explain the gold hunt Iran has launched after the Gulf war.

To stop an effort by the West to seize Iranian assets in Europe, the Iranian leadership decided to begin a massive, secret repatriation of its international currency reserves.

Therefore, the Central Bank of Iran started buying gold so that it can stall any economic threat by countries like US and England.

And, nobody knows how much gold Iran has already amassed. That too at a time when the world is still reeling under recession impacts and several central banks are hunting for gold to convert their foreign reserves into yellow metal.

So, Iran purchased gold secretly like China does it now and shipped it to their vaults. That was Iran’s intelligent move to shift its currency reserves to gold.

Earlier, Iran’s leadership wanted to purchase 700 tonnes of gold. However, their secret effort to convert Iran’s foreign currency holdings into gold appears to have stopped when word leaked.

The gold is now being held in the vaults of the Bank Markazi in Tehran. The asset repatriation plan was set into motion just weeks after Mahmoud Ahmadinejad took over as president of the Islamic Republic of Iran.

The decision was made during a strategic planning session of top regime leaders in Tehran, who were examining Iran’s options in the nuclear face-off with the West.

In addition to giving the orders to convert foreign currency holdings to gold and to repatriate them from Switzerland, the leaders also gave orders to Iran’s central bankers to move cash accounts from Europe into Arab and Russian banks, which they felt would be more immune to Western pressure.

Ahmadinejad this week visited Zimbabwe and Uganda, with whom he will discuss Iran’s nuclear programme.

Ahmadinejad’s visit to Uganda gains significance as world powers have stepped up pressure for a new round of UN sanctions against Iran for pursuing its nuclear programme.

The Gulf War wreaked devastation of unimaginable proportions on Iran’s infrastructure so much that even economic experts had predicted that it would be impossible to revive the economy in the foreseeable future.

But, Iran’s resilience to win back its lost glory has seen results in the recent past with countries like India even supporting the Iranian cause.

The economy of Iran is the sixteenth largest economy in the world by purchasing power parity (PPP). It is a transition economy with a large public sector and an estimated 40% of the economy centrally planned.

Exports are dominated by oil and gas which constituted 50% of government revenue in 2006. A unique feature of Iran’s economy is the large size of the religious foundations whose combined budgets make up half that of the central government.

High oil prices in recent years have enabled Iran to amass $97 billion in foreign exchange reserves. Yet this increased revenue has not eased economic hardships, which include double-digit unemployment and inflation.

According to the Central Bank of Iran, annual inflation declined to 11.5% as of February 2010. The economy has seen only moderate growth.

At this juncture, Iran’s policy of buying gold may make the country more self-reliant.