Turkey Sees Surge in Gold Certificate Demand: Government Attracts Citizens’ Savings into the Official Financial System
Cairo: Hani Kamal El-Din
In recent weeks, Turkey has witnessed a remarkable surge in demand for gold certificates, a trend that has significantly impacted their market value. This spike in interest is not just a financial shift but also a strategic move by the Turkish government to draw citizens’ savings out of informal storage and into the official financial system. This development is largely driven by global economic volatility and an increased appetite for gold as a safe-haven asset.
Unprecedented Surge in Gold Certificate Prices
According to data from the brokerage firm “Gedik Yatirim,” gold certificates traded on Borsa Istanbul have experienced a record-breaking premium, with a 21% increase this week. Although these certificates are theoretically linked to 0.01 grams of physical gold, this discrepancy in price is attributed to the significant rise in demand from investors looking to capitalize on the global gold price rally.
Burak Pirlanta, an analyst at Gedik Yatirim, attributes this surge to geopolitical tensions and trade uncertainties, which have fueled a rise in gold prices. As investors seek refuge in gold, Turkish gold certificates have become an increasingly popular investment tool.
Why Are Investors Turning to Gold Certificates?
Turkey ranks among the world’s largest consumers of gold, with imports far exceeding domestic production. The country’s central bank holds the exclusive right to purchase gold within its borders, making gold a central asset in Turkey’s financial landscape. Gold certificates, however, offer distinct advantages for investors.
The certificates provide an easy way to trade gold via mobile apps, offering narrow spreads between buying and selling prices, tax exemptions, and the flexibility to convert them into physical gold bars.
Unlike physical gold investors, those who opt for gold certificates tend to be more financially literate, favoring liquidity, cost-effectiveness, and tax-efficient investment tools. These investors often prefer digital access and the flexibility these certificates provide.
Government’s Role in Promoting Gold Certificates
The Turkish government has long sought to channel private savings that are typically kept in cash or under mattresses into the official banking and financial systems. In line with this strategy, gold certificates were introduced in November 2022 as an alternative investment instrument aimed at attracting domestic savings.
By promoting these certificates, the government aims to bolster the country’s gold reserves and increase financial inclusion, offering a formal channel for investment in one of the world’s most sought-after commodities.
Gold certificates have become an essential tool for the government, offering a way to guide citizens’ savings back into the formal economy, while providing tax breaks and easy conversion into physical gold when needed.
The Price Gap: Will It Last?
While gold certificates are enjoying unprecedented popularity, there is speculation about how long this price gap between the certificates and physical gold will persist. Experts predict that the current price divergence may not last in the long run, with many viewing the demand for certificates as largely speculative.
According to Chagdas Kucukemiroglu, a consultant at Metals Focus, the demand for gold certificates is more indicative of trading activities on the stock exchange rather than a genuine surge in physical demand for gold. As such, the price discrepancies could correct themselves in the near future as the market stabilizes.
Future Outlook for Turkey’s Gold Market
Looking ahead, the demand for gold certificates in Turkey is expected to continue rising, especially given the ongoing global economic uncertainty and geopolitical tensions. Experts believe that Turkey’s position as one of the largest gold markets will only strengthen, particularly with the expansion of digital gold products such as these certificates.
The Turkish government is likely to continue promoting these financial tools as a means of consolidating wealth within the formal financial system, offering citizens a secure and flexible way to invest in gold without the logistical challenges of holding physical assets.
