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The precious metal market in turkey in 2012 aroused the interest of the world partly due to the demand stemming from the Turkish market which astounded traders coupled with a rumour that Turkey was prepared to trade the precious metal with crude oil from Iran despite international sanctions. This was seen as a defiant move by the Turkish and could have drawn serious repercussions from the UN, but the fact it was ignored was largely due to the fact that gold has always been a safe haven for Turkey and her citizens for a long time.

Investing in gold has been a trait that has become almost like a cultural traditional to the Turkish population and it has had a positive impact as a counter measure towards the Turkish deficit that keeps getting from bad to worse. According to reports the population of this ancient land has by buying gold accumulated more than 5 tonnes of physical gold in their homes in the form of jewellery and gold bullion. The precious metal has a special place in the general saving schemes of the people in Turkey.

The World Gold Council recently made announcement pertaining to the role of Turkey in the precious metal industry and according to that report in 2013 alone the population’s demand for gold was almost 60 tonnes. This, in comparison to the gold reserves in Bundesbank in Germany which reportedly only has 3,400 tonnes in gold reserves this seemingly huge demand for gold from Turkey are due to the domestic population’s attempt to protect their wealth from the declining economies surrounding them including Europe.

The reason behind gold bullion being bought by the Turkish population as a tradition is due to the continuous deficit of their economy since 1965 and the encouragement the Turkish government have been giving their populace to invest in physical gold bullion, along with exchanging their foreign cash for gold or the local lira currency, actively have made Turkey the 7th biggest consumer of gold globally and according to most gold bugs the Turks will probably be among the top 5 largest gold consumers in future, but definitely behind India and China within the next few years.  Among the ‘encouragement’ that Turkish government gives its populace includes allowing gold in any form to be utilised as collateral for purchasing almost anything substantial including for the purpose of buying homes or securing loans.

These initiatives by the Turkish government have been actually successful towards getting their population to inject their savings into their economy that is almost subjected to an economic crisis every decade due to external shocks. However, these initiatives have managed to enable the Turkish banks to keep businesses afloat by keeping their capital markets open even during times when the economy is shrinking and these banks are currently estimated to hold no less than 3 Billion Dollars worth of gold deposits not including gold investment funds that are estimated to be more than 1 Billion dollars.

These figures are likely to increase when Turkey decides to mine their natural gold resources which are estimated to be within their borders.

GoldNews: Robert