Banks’ gold deposits climb 500 percent

ISTANBUL - Radikal

The value of bank gold deposits has jumped from 2.4 bln liras to 14.3 bln. AA photo

The value of banks’ gold deposits in Turkey has jumped 500 percent in the last year, up from 2.4 billion to 14.3 billion liras.

Gold, a safe haven for investors in hard economic times, is a traditional investment for households in Turkey. Now banks are preparing new products to attract the gold stashes of more individuals.

One of the main reasons why gold as a household saving form has become popular among banks is a change in the policy of the Central Bank. The Central Bank has increased the rate of gold deposits in required reserves from 10 percent in October 2010 to 20 percent in March 2012.

The amount of gold banks hold as part of required reserves for foreign exchange deposits is 25.3 tons, the figure is 48.4 tons required reserves for Turkish Lira deposits, according to Central Bank data.
Also, the total value of precious metal deposits has jumped 491.7 percent in domestic investors and 450 percent in foreign investors, concordantly with the increase in gold transaction of banks.

Some 5,000 tons of gold is held in households according to estimates. Banks now offer gold deposits, gold funds, gold-linked capital-protected fund in a race to lure more of these vast assets.

According to a report by the Association of Capital Market Intermediary Institutions of Turkey, gold is the best investment field in terms of average annual returns between 2007 and 2011. Gold returned an average of 17.7 percent annually to investors. This was followed by bonds with 9.2 percent.