As the Turkish economy goes into a steep decline with the Turkish lira reaching its lowest ever records to the U.S. Dollar and Euro, and as unemployment hovers just below 25% according to renowned Turkish economist Mahfi Egilmez, Turks are selling their foreign currencies to buy gold, and some are even contemplating selling their cars and houses to buy gold.
Reuters spoke to Hasan Ayhan who was using his saved up foreign currency to buy gold at the Grand Bazaar in Constantinople (Turkish: İstanbul).
“I think it is the best investment right now so I converted my dollars to buy gold,” he told Reuters, in an article published on Friday. “I might withdraw my lira and buy gold with it too, but I am scared to go to the bank right now because of coronavirus.”
Günay Güneş, who has a busy booth near the market’s entrance, told Reuters he had been “chatting with hundreds of people who are thinking about selling their cars or houses to invest in gold.”
Turks have traditionally used gold as savings and there may be as much as 5,000 tonnes of it “under mattresses”, Reuters cited Mehmet Ali Yıldırımtürk, deputy head of a Constantinople gold shops association, as saying.
Things are beginning to change in Turkey as they are now prioritizing U.S. Dollars and gold instead of the Turkish lira.
“Locals don’t want to keep Turkish lira, they’ve been dollarizing and buying gold. Turks have hardly ever done that historically,” said Shamaila Khan, New York-based head of EM debt strategy at AllianceBernstein, which manages $600 billion.
“That is why you need proactive policies because if you get to that stage where locals are unwilling to keep their money in the bank then you’re heading to a balance of payments crisis. That’s when the alarm bells will start ringing,” she said.
Excessive military adventurism coupled with endemic corruption and nepotism has helped contribute to the decline in the Turkish economy, which is why Turkish President Recep Tayyip Erdoğan has successfully kept his population distracted by creating a new crisis with Greece.