In Turkey, the practice of storing physical gold at home – known locally as yastık altı or “under the pillow” – is now being described by economists and government officials as a drag on the nation’s financial health. While the habit offers households a hedge against a volatile lira, officials argue that the roughly 5,000 tons of gold hidden in Turkish homes – valued at about $600 billion at current prices – is idle capital that could otherwise support businesses and stabilize macro‑policy.
Why Gold Remains a Preferred Safe Haven
Gold has long been woven into Turkish life events. At Istanbul’s Mahmutpaşa Yokuşu market, 23‑year‑old bride‑to‑be Nefise Asker searched for wedding attire while anticipating the traditional gift of gold. “We’ll share the gold as a couple to support our new life together,” she said, echoing a custom where gold serves as a lifelong safety net for spouses who may not work outside the home.
Economist Selva Demiralp of Koç University, a former analyst for the Turkish Central Bank, explains that the habit is not irrational. “People respond 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,” she said. With annual inflation hovering around 31 percent – one of the world’s highest – and the lira weakening, gold’s price remains near all‑time highs, offering a more reliable store of value.
Trust Gap Fuels the Gold Stash
Beyond hedging against price rises, the gold hoard reflects deep mistrust of official institutions. In a Koç University survey, nearly four in ten respondents gave commercial banks a trust rating of zero on a 0‑to‑10 scale, while more than half assigned the same low rating to the national statistical agency. The lack of confidence stems from historic banking crises, persistent inflation and what Demiralp describes as a “credibility gap” in economic data.
When deposit rates fail to keep pace with inflation – which Demiralp notes can approach 50 percent in real terms – households view gold as the only asset that can preserve purchasing power. “If you think inflation is going to run nearly 50 percent 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,” she said.
Economic Consequences of the Gold Cache
Economists warn that the concentration of wealth in physical gold creates several macro‑economic headwinds. “It’s not being lent out to businesses,” Demiralp said, adding that a substantial portion of the gold must be imported each year, adding pressure to Turkey’s current‑account deficit.
Depositing the hoarded gold into the formal banking system would give authorities clearer data on liquidity, enable more precise monetary policy and potentially restore the central bank’s ability to influence demand. President Recep Tayyip Erdoğan has repeatedly urged citizens to bring gold out from under their mattresses, launching incentives to convert it into bank deposits. Yet, according to market veteran Mehmet Yıldırımtürk, who has been a currency exchanger for over 50 years, “the gold just isn’t coming out from under their pillows. The government just hasn’t been able to provide that confidence yet.”
Even Asker, who plans to receive gold as a wedding gift, said she will likely keep it in a box at home rather than deposit it. “I’ll probably not put it under my pillow like in the olden days, but for sure I’ll hide it in a box at home,” she said with a smile.
The persistence of the gold‑under‑the‑pillow habit underscores a broader challenge for Turkey: balancing the rational desire of households to protect savings with the need for a more fluid, bank‑based financial system that can support growth, attract investment and curb unemployment.
Norman Pearlstine is the Executive Editor and Co-Founder at News Raise. With over two decades of experience across financial journalism, corporate governance, and market analysis, Norman leads the editorial direction and ensures strict adherence to journalistic accuracy and ethics.
