Turks often keep gold as a hedge against inflation. It may be hurting Turkey’s future. NPR’s Hadeel Al-Shalchi reports from Istanbul that billions of dollars worth of gold is held in Turkish households outside the banking system, and the government wants citizens to put it into the mainstream financial system to help the economy.
Gold At The Wedding
A woman who is getting married is shopping for her dresses before her September ceremony. She says she wants six outfits so she can change into a fresh one each day during her multi-day celebration.
“I’m trying to find the one I’ll wear during my wedding photo shoot.”
She’s just as eager for the staple of Turkish wedding gifts as she is for the dresses: gold.
“We’ll share the gold as a couple to support our new life together,” she says.
For centuries, gold has served as a kind of financial protection for women who did not hold paying jobs. Selva Demiralp, an economist who previously worked at Turkey’s central bank, describes what lies behind this custom.
“If everything goes south, you still have your gold that is gifted to you during your wedding, and that will be your lifetime savings.”
Why Turks Keep It Under The Pillow
Mehmet Yildirimturk has spent his 50 years selling gold at Istanbul’s historic Grand Bazaar, and during that time he has seen plenty of brides. He works from a small shop within the bazaar, where he counts gold coins on his glass countertop while a fan keeps the hot air moving around him.
“It’s a vital tool for Turks. It helps protect them, especially from inflation,” he says.
Turkey suffers from persistent inflation, with its rate among the highest globally, currently sitting at about 31% per year. That has pushed up daily living expenses for citizens. Gold, meanwhile, offers a steadier store of value, and its prices are at record highs.
According to Yildirimturk, putting gold away serves as a financial buffer for people living in Turkey.
“We call it (non-English language spoken), which translates to gold under the pillow.”
The Cost Of Idle Wealth
Today, nearly 5,000 tons of gold sit within Turkish homes, by the finance minister’s own estimate. The governor of the central bank of Turkey puts the value at roughly $600 billion.
Demiralp says that’s a lot of money kept idle.
“It’s not being lent out to businesses. And also, a good chunk of the gold has to be imported every year, which adds to the current account deficit. So it’s capital that’s parked rather than working.”
She argues that if all the money were returned to the banks, regulators would get a chance to do their work properly, which might help bring back trust in banking.
“There is going to be more trust in the economy, there’s going to be more investment, and eventually, that would lead to more jobs and less unemployment.”
Erdogan’s Push To Get Gold Into Banks
Turkish President Recep Tayyip Erdogan has been trying for years to get citizens to deposit their physical gold into the banks. He made the case during a 2023 speech to his Cabinet.
“This brings no benefit to either my people themselves or to my state,” he says.
Erdogan’s increasingly strong-handed economic policies haven’t helped either. He has fired six central bank heads over the last seven years.
Trust Runs Deep
These days, mistrust of Turkey’s banks runs very deep, according to Yildirimturk, speaking inside the Grand Bazaar.
“The gold just isn’t coming out from under their pillows,” he says.
“The government just hasn’t been able to provide that confidence yet,” he adds.
Nefise Asker, who is shopping for her wedding dresses, says she will not put any of the gold she has been given as a gift into the bank.
“It’s not going under a pillow but will definitely be hidden in a box at home,” she says.
The persistent issues for the government include:
- A gold seller with decades of experience saying his customers lack trust in banks
- The president labeling gold stashing “no benefit” to the state — despite pushing for it to enter banks
What makes keeping gold under the pillow ironic is that it requires no trust at all — it simply sits there, inert, serving no one except its owner. And that is precisely what makes it a problem.
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