Turkish citizens continue to maintain substantial gold holdings worth approximately $331 billion, despite government efforts to discourage private gold ownership and the availability of alternative foreign currencies. This significant accumulation of physical gold, amounting to 4,500 tons, reflects a deep-rooted financial strategy among Turkish households.
The practice, commonly referred to as “saving under the pillow,” has persisted even as Turkey’s government implements various measures to redirect these private gold holdings into the formal banking system. Turkish authorities have consistently urged citizens to mobilize their savings to stimulate economic growth, particularly during periods of financial instability.
These appeals come against a backdrop of severe currency depreciation and inflation, which reached a staggering 85.51% in October 2022. Rather than deterring gold ownership, these economic challenges have reinforced Turkish citizens’ preference for physical gold as a store of value.
The government has responded by implementing various restrictive measures, including increased sales taxes on gold purchases and stringent reporting requirements for jewelry transactions exceeding $5,000. In 2024, authorities banned the sale of uncertified cut gold bars. Banks have also maintained significant spreads between buying and selling prices, effectively pushing much of the gold trade underground.
Despite these obstacles and ready access to dollars and euros, Turkish citizens predominantly choose to hold physical gold. While some attribute this preference to cultural traditions, it appears to be more closely linked to practical financial considerations and a lack of confidence in paper currencies.
Notably, a prominent Turkish economist has observed that these private gold reserves, though criticized by authorities, actually provide crucial economic stability during crises. Turkish citizens often manage financial stress by strategically selling and later
repurchasing gold, helping to maintain economic momentum during difficult periods.
Previous attempts to integrate private gold holdings into the formal banking system date back to the 1980s. These initiatives, including interest-bearing gold deposit schemes, largely failed due to public concerns about liquidity risks. Citizens worried about scenarios where banks might be unable to fulfill physical gold withdrawal requests, particularly if the deposited gold had been converted to foreign currency.
More recent government initiatives have also struggled to gain traction. The 2022 Gold Conversion System, following Erdogan’s 2016 patriotic appeal, failed to convince citizens to part with their physical gold holdings. While official sources attribute this failure to cultural norms and practical concerns, the underlying issue appears to be a fundamental lack of trust in government financial management.
The situation draws parallels to broader international discussions about physical gold ownership versus paper alternatives, reminiscent of debates surrounding COMEX, London, and Basel III regulations. Turkish citizens’ persistent preference for physical gold ownership reflects a practical response to decades of economic uncertainty and currency instability.
This steadfast commitment to physical gold ownership by Turkish households, despite government disapproval and various deterrent measures, demonstrates a sophisticated understanding of wealth preservation in an environment of monetary uncertainty. The continued accumulation of gold suggests that Turkish citizens have found a reliable strategy for maintaining financial stability, even as their national currency faces ongoing challenges.