ISTANBUL — In Turkey, gold is far more than a decorative accessory. It is gifted throughout life's major milestones and stashed safely at home—a time-honored practice designed to protect savings against frequent currency devaluations and a volatile national economy.
However, Turkish officials and economists warn that this culture of gold hoarding is actively undermining the country's financial future.
At the bustling Mahmutpaşa Yokuşu market in the heart of Istanbul, store owners call out their wares while shoppers dart between stalls, snapping up everything from kitchen gadgets and blankets to elaborate wedding dresses.
Among them is Nefise Asker, a 23-year-old bride-to-be searching for the perfect outfit for her upcoming wedding photoshoot—one of six outfits she plans to wear over a multi-day celebration this September. Like many Turkish brides, Asker is eager to receive the traditional staple of Turkish wedding gifts: gold.
"We'll share the gold as a couple to support our new life together," Asker says.
Historically, gifted gold used to serve as financial insurance for wives who did not work outside the home.
"If everything goes south, you still have your gold that is gifted to you during your wedding, and that will be your lifetime savings," explains Selva Demiralp, an economist at Istanbul's Koç University and a former economist for the Turkish Federal Reserve.
That mindset extends far beyond newlyweds. In Turkey, the practice of holding wealth as physical gold or foreign currency outside the formal banking system—known locally as yastık altı, or "under the pillow"—is sometimes dismissed as an outdated habit. However, Demiralp emphasizes that this behavior is a logical defense against chronic instability.
"Once you look at why people do this, it stops looking irrational actually, and it's a very rational response to a long history of high and unpredictable inflation, a few banking crises people still remember, and a general sense that the lira just doesn't hold its value the way gold does," Demiralp explains.
In Istanbul's historic Grand Bazaar, Mehmet Yıldırımtürk sits in his cramped, stuffy shop counting gold coins on a glass countertop as a small fan circulates the warm air. Yıldırımtürk, who has worked as a currency exchanger and gold seller for over 50 years, views gold as an essential line of defense.
"Gold is a vital tool for Turks," Yıldırımtürk says. "It helps protect them, especially from inflation."
Inflation remains a chronic crisis in Turkey, hovering around 31% annually—one of the highest rates in the world. As the Turkish lira continues to weaken, daily living costs have skyrocketed. Gold, by contrast, offers stability, with prices hovering near all-time highs. Stashing physical gold at home provides Turkish families with a reliable financial cushion.
According to the Turkish finance ministry, Turkish households currently store roughly 5,000 tons of gold. At current prices, that hidden wealth amounts to approximately $600 billion, according to the head of the Turkish Central Bank.
Trust Gap
Beyond hedging against price increases, keeping savings hidden reflects a systemic distrust in official institutions. Demiralp's research at Koç University highlights how severe this disconnect has become.
"We asked people directly how much they trust the country's key economic institutions on a 0 to 10 scale, and nearly four in 10 rated their trust in commercial banks close to zero," Demiralp notes.
Trust in the statistical agency was even lower, she said. Over half the respondents in her survey put it in the same near-zero range. So when people choose gold over a lira account, they are reacting to a broader credibility gap in institutions meant to manage and report on the economy.
Demiralp said that public mistrust of Turkish commercial banks is rooted in a combination of historical economic trauma, persistent inflation, and a broader credibility gap in institutions. Turkish households still carry memories of past banking crises, which creates a hesitation to leave their savings inside the formal banking sector.
This, she said, is further fueled by the stark reality of chronic inflation and negative real interest rates. When households see prices on daily goods rising at a higher rate than official inflation figures suggest, it erodes their faith in the government's numbers. Therefore, holding money in the bank feels like an automatic loss of purchasing power compared to physical gold.
As Demiralp points out, "If you think inflation is going to run nearly 50% and the deposit rate you are being offered doesn't come close to compensating for that, then gold looks like a safer bet in real terms. When we ask people directly what they plan to do with their savings going forward, gold is by a wide margin the single most popular answer."
Wider Economy
Yet economists warn that keeping such a vast sum idle creates severe headwinds for the broader economy.
"It's not being lent out to businesses," Demiralp says. "And a good chunk of the gold has to be imported every year, which adds to the current account deficit. So it's capital that's parked rather than working."
Demiralp notes that if hoarded gold were deposited into the formal banking system it would allow economic authorities to keep track of exact liquidity volumes, observe account behaviors, and design effective, targeted macroeconomic policies based on real data rather than rough estimates. It would restore the central bank's ability to influence economic demand, making monetary policy tools effective again—a necessary step toward achieving price stability, attracting foreign investment, and reducing unemployment.
Turkish President Recep Tayyip Erdoğan has repeatedly urged citizens to bring their gold out from under their mattresses, launching various government incentives and banking programs aimed at converting physical gold into bank deposits.
"This brings no benefit to either my people themselves or to my state," Erdoğan declared in a 2023 Cabinet speech.
Despite these initiatives, the government's efforts have largely failed. Critics point to Erdoğan's unorthodox economic policies and heavy-handed control over financial institutions—including firing six bank heads over seven years—as key factors fueling public skepticism.
"The gold just isn't coming out from under their pillows," Yıldırımtürk says. "The government just hasn't been able to provide that confidence yet."
And bride-to-be Nefise Asker agrees. She has no intention of depositing her wedding gold into a bank account.
"I'll probably not put it under my pillow like in the olden days," Asker says with a smile. "But for sure, I'll hide it in a box at home."
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