1.5 pct of 5,000 tons of ‘under-the-mattress’ gold rejoins Turkish financial system

ISTANBUL

Some 75 tons of under-the-mattress gold has rejoined the Turkish financial system, a sector official has said, noting that the government had been working on new plans to give a significant boost to this amount.

Nearly 2,500 or 5,000 tons of gold worth $100 billion or $200 billion are estimated to be under mattresses in Turkey.

Istanbul Gold Refinery (İAR) CEO Ayşen Esen told Reuters 2017 was an import-intensive year for the gold market, adding that 2018 would likely be an export-oriented year.

She noted that there were nearly 2,500 or 5,000 tons “under the pillow” in Turkey, and the total value of these were between $100 billion and $200 billion, according to estimates.

Turks have a long-standing history of turning to gold to protect their wealth, preferring to store it in their own homes to make savings at home.

The government and banks have therefore tried to convince gold buyers to take their gold from under the mattress and either sell it or put it in banks to give a boost to the country’s savings, which are at very low levels.

Further measures ‘needed’

Esen said gold banking was on the rise in the country mainly due to a number of measures, including the acceptance of gold by the Central Bank from lenders as their reserve requirements.

Turkey in 2011 launched a bank deposit gold scheme, aimed at adding some of the country’s privately-held coins and jewelry to its official Central Bank reserves. Since 2016, the Central Bank has also accepted raw gold from banks.

Turkey’s Treasury issued gold bonds in October, in addition to the previous efforts.

Saying that the first stage of this issuance was completed, Esen noted: “We believe this move makes quite sense.”

“Turkey’s 11 banks collected nearly 60 tons of gold last year. They collected nearly 75 tons of gold this year when the gold issuance of the Turkish Treasury is added,” she also noted.

This is, however, not enough, she said, adding that the government was expected to launch additional measures that will enable much higher levels of gold to enter the financial system rather than being stashed under the mattress.