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Turkey To Make Use Of 2,200 Tons Of Gold Stashed 'Under Mattresses'

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Turkey To Make Use Of 2,200 Tons Gold Stashed ‘Under Mattresses’

(Kitco News) - The Turkish people have reportedly stashed gold "under mattresses" and the government wants a piece.

Officials want to make use of the bullion by issuing “gold bonds and the gold-based rent certificates,” the Deputy Prime Minister Mehmet Simsek said on Sunday.

The bonds could attract as much as 300 billion Turkish Liras worth of gold, which converts to about US$85.9 billion.

“The first issuance of gold bonds and the gold-based rent certificates will begin between Oct. 2 and 6 in an attempt to benefit the economy with the under-the-mattress gold of citizens, which is estimated to be almost 2,200 tons in total,” Hurriyet Daily News quoted Simsek as saying.

The next day Simsek clarified that the decision to issue gold bonds has nothing to do with the Turkish Treasury’s need for money, but instead is driven by the government’s attempts to bring “under-the-mattress” savings into the economy.

“The Treasury has no borrowing problem. We [want] the economy to run faster, to increase savings and solve resource problems as well as bring out the under-the-mattress savings into the economy,” he told Bloomberg. “We know very well that there is a gold stock in Turkey which stands at around 300 billion, according to some estimates, but this gold remains idle.”

Turkey’s state-run Ziraat Bank will be in charge of estimating market value of citizens’ gold and equating it to bonds, Simsek added, noting that assets will be returned once bonds’ due dates expire, increasing savings for individuals based on rising gold prices.

People will be given back gold bullion or quarter gold coins produced by the General Directorate of Mint, according to local media reports.

Simsek added that “rent certificates based on gold” will be similar to Sukuk bonds, which aim to attract investors who are against making profit from interest rates, as they are prohibited in the Islamic banking system.

“[Gold bonds and the gold-based rent certificates] will have positive effects on the economy in the long term. They will decrease our external dependence with regard to our source need, which is necessary in the growth of the economy,” Simsek noted. “Their investments are also going to turn into savings under the guarantee of the government.”

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