Thousands of tons worth 280 billion dollars What is the story of gold "under the pillows" in Turkey?

While discussions continue about the possibility of persuading citizens to take the gold out from under their pillows and enter it into the financial system, it is estimated that there are more than 5,000 tons of gold under the pillows of the Turks.

Turkish President Recep Tayyip Erdogan renewed his call for the necessity of removing the gold hidden under the pillows and entering it into the financial system in order to boost the country's economy.

In a speech on Monday that was followed by a massive return of the Turkish lira which recorded an unprecedented recovery, President Erdogan said: “There are 5,000 tons of gold worth $280 billion under the pillows in Turkey.”

Erdogan indicated that his government is now working on developing new tools in order to attract this dormant gold into the financial system and bring it into the economy.

What is meant by "under the pillows" gold?

Gold is traditionally seen as the surest means of saving in Turkish society, and Turks often keep it in their homes where they prefer to be able to touch it and keep it close to them. In addition to being a means of saving approved since ancient times, Turks also use it as a societal condition to show their material wealth, by wearing gold ornaments and jewelry on private and public occasions, especially weddings.

And gold "under the pillows" is an economic term for gold that was bought through legal and legal means, but it was out of the financial system after the Turks preferred to keep it in their homes instead of depositing it in banks and banks.

Recent estimates indicate that there are about 5,000 tons of gold hidden under the pillows in Turkey, with a total value of more than $280 billion.

While the vast majority of Turks deal with gold as a savings and savings tool and not as an investment tool, because if it is decided to use it as an investment tool, it will not remain under pillows in homes, but will enter the financial system in order to trade it through banks and investment portfolios.

Serious efforts to include it in the financial system

Although gold under the pillows in Turkey is a serious financial resource for the country's economy, this resource is currently dormant as it remains outside the Turkish financial system.

Since 1996, successive Turkish governments have pursued many incentive financial policies to attract the sleeping gold under the pillows of the Turks and introduce it into the financial system. Banks at cost through private gold bank accounts.

For his part, Dr. Umut Hallaj, Head of the Economics Department at Yasar University, believes that gold under the pillows is not a non-economic product, as it is present in the economy and is included in the GNP accounts, because if you buy legally produced gold with legally earned money, the monetary value of this Gold is taken into account in the GNP.

Referring to the dangers of gold that is not registered in the financial system, Hallaj said, "The biggest risk related to gold under the pillows in Turkey is that it is the easiest way to launder illegal transactions. It is not possible to trace who bought the quantity and for what purpose."

Turkey's gold reserves

According to statistics from the World Gold Council and based on the International Monetary Fund (IMF), there are a total of more than 35,000 tons of gold reserves in the world. Turkey ranks 12th in the list with the highest gold reserves with 512.6 tons, according to the latest data issued last August.

It should be noted that gold, which provided its investors with a 24% return on an ounce basis last year, is in fact one of the sources of the trade balance deficit, which is one of Turkey's most important problems. While Turkey exported 52.6 billion dollars of gold in the last 10 years, it imported 107.3 billion dollars in return. In other words, $54.7 billion of current account deficits have been caused solely by gold in the past 10 years.

And again, looking at the recent stats. As it is known in India, which ranks second in the world in terms of physical demand for gold, the estimated amount of gold under the pillow is estimated at about 25 thousand tons. Considering that India has a population of about 1.4 billion people, the average gold hidden under Indian cushions is about 17 grams per capita. But the average is much greater than in India, when we divide the gold "under the pillows", which is estimated at 5,000 tons, by the total population of Turkey of 83 million, the gold under the pillow is about 60 grams per capita.