Turkey tries to discourage gold buying

Following in the footsteps of India, Turkey is now also trying to buy gold. discourage. The people of the country buy gold jewelry, coins, and gold bars as a form of savings, much to the dismay of the banks. They would like to manage the savings of the Turks and therefore try to entice customers to hand in their gold.

For the past five years, the Istanbul Gold Refinery, in cooperation with the banks, has been trying to collect gold that the Turks have been saving for years. The banks are keen to manage this precious metal and therefore offer free storage for gold up to an amount of 150,000 Turkish liras (about €50,000).

Turks who hand in the gold at the bank receive a special bank balance. They can then request this credit in cash at any time. According to the Istanbul Gold Refinery, it is wise to hand in gold to the bank, as it will be protected against theft or loss.

Saving in gold

There are an estimated 5,000 tons of gold in Turkish households, which are jewelry, coins and gold bars that are kept in reserve as a form of savings. This means that the population at the current Gold price has a gold hoard of 580 billion Turkish liras (almost €200 billion).

According to economists and bankers, this gold should be put into circulation, because it would not yield anything if it were kept somewhere at home. According to Durmus Yilmaz, former governor of the Turkish central bank, the population should be encouraged to put their money in investments other than gold.

"You have to find a way to encourage citizens to put money in a savings account or to invest it in stocks and bonds instead of gold. The gold does not end up in the economy. The person who buys it puts it in the safe, it doesn't have any impact on the market", Yilmaz said.

Gold price in Turkish lira to record

It is not surprising that the Turkish people prefer to save in gold rather than in the bank. Since 1999, the price of gold in Turkish lira has risen by a factor of forty. By comparison, in euros and dollars, gold is now worth almost five times as much as it was in 1999. Due to high inflation, it is simply not attractive to put a lot of money in a savings account. Instead, one prefers Buy gold. 

Gold price in Turkish lira