Turkish households hold an estimated $311 billion worth of unregistered physical gold outside the formal financial system, a massive stockpile far exceeding the central bank’s official reserves.
Beyond Banks: Türkiye Citizens Hold $311B in Physical Gold
According to central bank estimates cited by Onur Erdogan for Türkiye Today, this “under-the-pillow” gold, calculated as of the third quarter of 2024, vastly overshadows the Turkish Central Bank’s $86.54 billion in gold reserves and the $46.26 billion in gold deposits held within Turkish banks as of March 2025.
Türkiye Today’s Erdogan reports this vast household hoard significantly contributes to the country’s current account deficit, adding $6.27 billion to the gap between January and April 2025 due to high gold imports. The tradition is deeply rooted in culture, Türkiye Today explains.
Chart Source: Onur Erdogan/Türkiye Today
Gold, primarily as jewelry, plays a crucial symbolic and financial role in weddings, ceremonies, and family savings. Türkiye was the world’s fourth-largest gold jewelry market in 2023, with demand hitting 42 tonnes, Erdogan reports. Jewelry remains a preferred tangible asset for many, even as investment bars and coins gain popularity.
Persistent high inflation and a weakening Turkish lira have further driven the shift towards physical gold as a hedge, Erdogan writes for Türkiye Today. Households increasingly distrust the national currency, especially after inflation peaked at 85.51% in October 2022. Holding physical gold privately also offers significant tax advantages, the report notes, as it avoids withholding tax on deposit interest and reporting requirements for large financial transactions.
A new 0.2% transaction tax on bank-bought gold, implemented in March 2025, reinforced this preference. Economist Mahfi Egilmez told Türkiye Today this off-record gold acts as a critical financial buffer during economic distress, helping Türkiye absorb shocks like currency depreciation without systemic collapse. Liquidating private gold holdings provides essential liquidity when formal systems falter, contributing to unexplained capital inflows recorded in the balance of payments.
Despite decades of government efforts to draw this gold into the formal banking system – from initiatives in the 1980s to President Erdogan’s 2016 appeal and the 2022 Gold Conversion System – success remains limited. The study shows that deep-seated cultural norms, economic uncertainties, and practical concerns continue to outweigh incentives like gold-backed certificates, keeping the vast majority of household gold “under the pillow.”
