FX.co ★ Turks prefer gold to greenback

When a national currency does not look appealing, the locals look for other ways of keeping their savings. Usually, people flock to more stable currencies, real estate, and safe-haven assets. For example, Turkey decided to buy gold. This year, Turkey bought gold bullion and coins in the volume of 47 metric tons; while in the same period last year, the country purchased only 14.8 tons.

Gold is obtained both by the country’s citizens and the central bank. According to experts, a drop in the lira is not the only reason behind increased interest for gold. Perhaps, the Central Bank of the Republic of Turkey (CBRT) wanted to be extra careful amid heightened tensions between the United States and Turkey. Turkish President Recep Tayyip Erdogan encouraged the population to buy gold instead of the US dollar, that is to keep their savings in gold. Anyway, the Turks do need an alternative to the fast-depreciating national currency. After Erdogan amended the country’s constitution, the lira lost 15 percent against the greenback in a year.

According to the situation in the global arena, the Turkish lira lacks growth stimulus but has lots of reasons to keep sinking. For example, the recent visa conflict between Turkey and the US triggered a new wave of speculations. On such a background, gold looks very attractive. Besides, if the country still has funds to buy bullion and coins, everything is not that bad!