The unending story of Turks’ concealed savings in gold began half a millennium ago. The people of Turkey never tire of the subject. Lately, it’s been the turn of the country’s central bank, the TCMB, to take up the baton.

The popular notion, of course, is that bullion is stashed under mattresses, and in many instances that is very likely the case. Stories of under-the-mattress gold perhaps first started circulating in 1444 with the first debasement (the lowering of the intrinsic value of coinage, tağşiş in Turkish) employed by Mehmet II (who at that point in history was yet to receive the title of Conqueror, which came following the invasion of Constantinople in 1453).

Following those times, the Turkish state created inflation and the Turks have resorted to “gold under the mattress” ever since. The more modest talk of a “pillow”.

The ancestors of our bright public servants, who advised their sultans to apply a debasement whenever they faced bankruptcy, passed down wisdom that is still with us today. The advice goes as follows: when the boss faces ruin, tell them to initiate a discussion on the enshrouded gold.

For one thing, those broaching the matter of gold can’t fail with our excitable media. The ears of any good hack prick up at the mention of the shiny stuff. Even more so nowadays, when the search for the “golden click”, the click that sets off a million clicks, erects a zillion ears, is always under way in earnest.

Screenshots: The Turkish government can talk about under-the-mattress gold until the cows come home. It was ever so.

Central bank digs under the mattress

Public servants at the central bank of the Erdogan era first played the gold card in 2012, when the polemic of the day was the country’s booming current account deficit.

In the fourth inflation report published that year, the authority inserted two boxes on gold affairs.

It’s numbers, so it’s science

When the central bank gives you boxes in its quarterly inflation report please sit up for what you have here is a scientific perspective. Cast aside all suspicion of nonsensical chatter surrounding the monetary policy, for this is science. It must be so, for you are confronted by a box, several in fact.

Some boxes are more curious than others. One specimen that came before your correspondent’s eye argued that a boom in gold imports was caused by a dramatic surge in gold exports to Iran. The side effects of the surge are apparently still around. And the advent of Donald Trump 2.0 is supposed to solve matters once and for all.

Another box represented an attempt at estimating the gold stock snoring households would rather you not know about. Top wonks had added quarterly gold production, quarterly gold imports and the previous quarter’s gold stock, while subtracting gold exports.

In a statistical series starting from 1985, the 1984 gold stock was put at zero. The illegal movement of the lustrous metal in both directions (in and out of the country) was also kept out of the equation.

Gold, it’s a gas, make a stash

Thirteen years ago, the central bank estimated that Turks had 2,189 tonnes of gold worth $116bn stashed under the bed as of August 2012.

Over at the research department of QNB Turkey (QNBTR), the central bank’s methodology prevails when the institution releases monthly report updates. Accordingly, Turkey’s combined gold stock (including central bank reserves, gold deposits and the under-the-mattress treasure) is said to have reached 4,300 tonnes worth $500bn.

The market value attached to the held gold stock has, meanwhile, risen by $150bn, equivalent to 10% of the country’s GDP across the last year.

Play card, validate with box

In its first inflation report of the year, released in February, the central bank was once again banging on about gold. It came armed with a gold “card” to play and a gold box to validate.

Critics had been making a commotion over high rates creating a wealth effect, with huge returns pumped through to deposit holders. These beneficiaries were in turn driving Turkish home and vehicle sales to record heights, said the ingrates, complaining that the desired moderation in domestic demand would never arrive.

Hoving into view, the box blamed the gold holdings and rent hikes.

TCMB, the blogger

Never short on science in monetary policy, the TCMB has a blog. What’s more, unlike the anonymously compiled boxes, the blog posts come with bylines.

A post in May added some logarithmic equations to the gold polemic, making the numerical arguments even more scientific.

Deputy central bank governor Cevdet Akcaya, a master of the scientific business, arrived in post in July 2023. Massive use of blog science ensued. You have a question? There’s no need to squabble. It’s been solved.

Sometimes it seems a pity that the TCMB is not in a position to resign from its one overriding legal duty, achieving price stability. Given the merciless course of inflation that the nation has endured, there are those that pray the day will come. The regulators’ top personnel will not be short of an alternative career – in the world of blogging, they have already earnt their spurs.

Box 2.5

To repel the accusation made in the first quarter against policy rates, the blog post authors, namely Mehmet Selman Colak, a director at the central bank, and Mehmet Emre Samci, a specialist at the institution, threw part of the blame in the direction of gold deposit holders.

They observed: “Similarly, physical gold holdings are also estimated to have increased. For further information: CBRT, Inflation Report 2025-I, Box 2.5 Valuation Effect on Household Assets.”

Intangible Colak and Samci

One Gold Coin of the Turkish Republic (cumhuriyet altini, issued by Turkish state mint Darphane since 1925) should certainly go to each of Mr Colak and Mr Samci. It should mark their efforts in keeping alive the centuries-long tradition of the Turkish bureaucracy.

A mention on UNESCO’s world list of intangible cultural heritage would also not go amiss.

The gold bone’s connected to the deposit bone

Blog it and box it hard enough and the argument is made: high policy rates are not responsible for the wealth effect clearly observed in record home and vehicle sales. No, certainly not. It is rising gold prices.

Think chain reaction. Record gold prices seen since September 2023 feed into the blessed returns enjoyed by the holders of gold-denominated deposits at local banks, which drive demand for housing and automobiles. It has a beautiful simplicity. “The gold bone’s connected to the deposit bone, the deposit bone’s connected to the …”

I have the science stupid!

This is not a moment where we may brook any argument, for the blog post came with a high-level algebraic equation, mainlined by scientific truth.

Screenshot: The scientific formula that proved it was gold prices all along that caused the record home and vehicle sales and that it’s a fool’s game to believe it was high deposit rates.

The best thing about an equation like this is that the result is always different each time you run it. If you want an equation to falsify the scientific facts, hands off, this one’s mine.

It would be rude to recall Ibn Khaldun (who argued that it is not science if you cannot repeat it and test) and Karl Popper (who argued that it is not science if it is not falsifiable).

Latest and the greatest

Ah, the joy of the gold talk. Once again, the central bank is hooked. A gold box is also employed in the latest inflation report, released on November 7.

This time the lucky recipients of the report were treated to a box, a logarithmic equation and a slice of scientific truth demonstrating that gold prices have also been boosting card expenditures.

Screenshot: The scientific formula proving that gold prices have been up to no good again, this time pushing up card expenditures.

Governor tells gold sob story in Amsterdam

Why save all this stuff for the domestic market. In October, the central bank governor, Fatih Karahan, appeared at an event in Amsterdam. Turkish households, he informed others in attendance, took their slumber lying on top of as much as $500bn of under-the-mattress gold. Regrettably, he told his audience, such a stockpile weakens the effectiveness of monetary policy. What’s a poor central banker to do?

Screenshot: Golden own goal? The governor clarified the situation before the budget commission in parliament.