ISTANBUL — In Turkey, physical gold is not merely an adornment but a cornerstone of financial survival, gifted during weddings and hoarded at home to shield savings from recurring currency devaluations. However, government officials and economists warn that this pervasive tradition, known as “yastık altı altın” or “gold under the mattress,” is actively undermining the nation’s financial stability.
Finance Minister Mehmet Şimşek has estimated that approximately $640 billion in gold and foreign currency is held outside the formal financial system. For many Turkish families, keeping wealth in tangible assets rather than bank deposits is a rational response to chronic inflation, which currently hovers around 31%, and a history of banking crises.
At Istanbul’s historic Grand Bazaar, gold sellers report high demand. Mehmet Yıldırımtürk, a veteran currency exchanger, describes gold as a vital defense against inflation for Turks. Unlike the volatile lira, gold prices are near all-time highs, offering a reliable store of value for households worried about eroding purchasing power.
Nefise Asker, a 23-year-old bride preparing for her September wedding, echoed this sentiment. She anticipates receiving gold jewelry as part of traditional wedding gifts to support her new life. Selva Demiralp, an economist at Koç University and former central bank official, notes that while outsiders may view this habit as outdated, it is a logical safeguard for wives who historically relied on gifted gold as lifetime savings insurance.
Demiralp’s research highlights a severe “trust gap” underlying this behavior. When surveyed on a scale of zero to ten, nearly 40% of respondents rated their trust in commercial banks close to zero. Trust in the country’s statistical agency was even lower, with over half of participants placing it in the same near-zero range.
This institutional skepticism is fueled by a disconnect between official inflation figures and the rising cost of daily goods. With real interest rates often negative, depositing money in banks feels like an automatic loss compared to holding physical gold. Demiralp observes that when asked about future savings plans, gold remains the overwhelmingly popular choice.
Despite the individual rationality behind these choices, economists caution that keeping such a vast sum of capital idle outside the banking sector limits the resources available for investment and growth, posing a significant challenge to Turkey’s broader economic future.
Honestly, who would trust banks after all those crises? Physical gold at least doesn’t delete itself overnight.
I find it surprising that trust in statistical agencies is so low. If official numbers feel like lies, what else can you believe?
Have you tried explaining negative real interest rates to your grandmother? Sometimes logic just loses to lived experience.
640 billion dollars stuck under mattresses? That must be incredibly frustrating for the government trying to stimulate growth.
It is fascinating how tradition and economics collide here. Gold really is the only reliable partner for these families.