In Turkey, gold is more than just decorative jewelry. This precious metal is given as a gift on important life occasions and is securely kept at home. This old tradition has developed to protect savings against the frequent depreciation of currency and the economic fluctuations of the country.
Economic Concerns
However, Turkish officials and economists warn that this culture of gold accumulation actively undermines the country's financial future. Turkey's Finance Minister, Mehmet Şimşek, stated that about $640 billion in gold and foreign currency is held outside the financial system. For many Turkish savers, gold remains a safe method to protect money against inflation and economic uncertainty.
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This practice is known as "yastık altı" or "gold under the pillow," referring to the tradition of holding wealth in physical assets instead of banks. In the bustling "Mahmutpaşa" market in central Istanbul, shop owners display their goods to customers while buyers search among the stalls for various essential items.
Old Traditions and Economic Reasons
23-year-old Nefise Asar, who is looking for a suitable dress for her wedding photos, said, "We share gold as a couple to support our new life together." Gold was considered a financial insurance for spouses who do not work outside the home, especially in the past.
Sylvia Demiralp, an economist at Koç University, explained: "If everything goes wrong, you still have the gold that was gifted to you at your wedding, and this will be your lifelong savings." This mindset extends beyond newlyweds. In Turkey, holding wealth in the form of gold or foreign currency outside the official banking system is seen as an old habit, but Demiralp believes this behavior is a rational defense against ongoing instability.
She said, "When you look at the reasons for this behavior, it no longer seems unreasonable, and it is a very logical response to a long history of high and unpredictable inflation, several banking crises, and the general feeling that the lira is not worth as much as gold."
In the historic "Grand Bazaar" of Istanbul, Mehmet Yıldırım Türk, with over 50 years of experience in selling gold and currency, sees gold as a vital tool for Turks. He said, "Gold is a vital tool that helps Turks, especially against inflation."
Trust in Financial Institutions
Inflation in Turkey is at an annual rate of 31 percent, one of the highest in the world. While the Turkish lira continues to weaken, the cost of living is rising day by day. In contrast, gold offers stability, and keeping gold at home provides Turkish families with a reliable financial cushion.
According to the Turkish Ministry of Finance, Turkish families currently hold about 5,000 tons of gold, which at current prices amounts to nearly $600 billion in hidden wealth. Keeping savings hidden is a sign of systematic distrust in official institutions. Demiralp's research at Koç University shows that this distrust has significantly increased.
She added, "We directly asked people how much they trust the country's key economic institutions, and nearly 40 percent rated their trust in commercial banks as close to zero." This distrust in official economic institutions could have serious implications for the country's financial future.
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Source: npr.org
