Turkish Government "Goes For Gold"; Seeks To "Transfer" Private Gold Holdings Into Ba

[osoab]

Turkish Government "Goes For Gold"; Seeks To "Transfer" Private Gold Holdings Into Bank System

Gold may not be 'money' to the Chairman, but it sure is to Turkey. The WSJ reports that "The Turkish government, facing a bloated current-account deficit that threatens to derail the country's rapid expansion, is trying to persuade Turks to transfer their vast personal holdings of gold into the country's banking system." The reason: "The push to tap into the individual gold reserves—the traditional form of savings here—is part of Ankara's efforts to reduce a finance gap that is currently about 10% of gross domestic product." In other words, "sequester" the population's hard assets (politely of course), and convert these to paper to fund the country's creditors, both foreign and domestic. Mostly foreign. In other words, Southeast Europe is slowing becoming the staging ground for the 21st century equivalent of Executive Order 6102, where first Greek, and now Turkish gold, is about to be pulled from point A to point B, where point B is some top secret vault deep under London.

Hey Neuro, you going to help out?

[Neuro]

Turkish Government "Goes For Gold"; Seeks To "Transfer" Private Gold Holdings Into Bank System

Hey Neuro, you going to help out?

FUCK THAT! They can try and pry it out of my cold dead hands! FUCKING ARSEHOLES! Now I will read the article...

[Neuro]

Here is more:

http://online.wsj.com/article/SB1000...googlenews_wsj
ISTANBUL—The Turkish government, facing a bloated current-account deficit that threatens to derail the country's rapid expansion, is trying to persuade Turks to transfer their vast personal holdings of gold into the country's banking system.

The push to tap into the individual gold reserves—the traditional form of savings here—is part of Ankara's efforts to reduce a finance gap that is currently about 10% of gross domestic product.

Government officials say the banking regulator will soon publish a plan to boost incentives for consumers to park their household wealth inside the financial system. Banking executives said they are considering new interest-yielding gold-deposit accounts that would allow savers to withdraw gold bars from specially designed automated teller machines.

The moves come after the central bank in November announced that lenders could hold up to 10% of their local-currency reserves in gold, in part to tempt Turkey's gold hoarders to deposit their jewelry, coins or bullion at banks.

Economists say the policy shift is designed to change Turks' historic preference for storing a high percentage of personal wealth outside the banking system as a way to protect themselves against the economic volatility that has periodically hit Turkey in recent decades.

The effort is one front in a broader battle to encourage more savings while curbing the ballooning current-account deficit—a pressure point many investors fear could upend a fast-growing economy, estimated to have expanded more than 8% last year. Turkey's current-account gap has expanded faster than expected in recent weeks amid a surge in oil prices and data showing unexpectedly high consumer demand.


"Turkey has historically been hit by crises and inflation, so the tradition of holding gold outside the system could be hard to shift," said Murat Ucer, an economist at Global Source Partners, an Istanbul-based research consultancy.

The size of the gold haul stored outside Turkey's banking system is hard to quantify; no data reliably capture the scale of the informal economy. The Istanbul Gold Refinery estimates the figure at 5,000 metric tons, valued at $270 billion. Recent numbers show many consumers have boosted home-held deposits even as the country's tightly regulated banking system won plaudits for comfortably weathering the financial crisis.

Enlarge Image

European Pressphoto Agency
Gold shops at the Grand Bazaar in Istanbul, above. Many Turks hold a high percentage of their personal wealth in gold, fearing economic volatility.

Last year, as the Turkish lira tumbled almost 20% against the dollar—the fastest fall of any currency in the world—Turkish demand for gold bars and coins surged 99% from the previous year, according to data from the World Gold Council.

That suggests that despite a tripling of incomes and a sharp reduction of unemployment in the past decade, Turks remain nervous that holding too much of their assets in banks could leave them exposed to losses.

Data also show savings held inside the financial system have declined sharply as the once-volatile economy entered a period of relative stability after a banking crisis in 2001. According to the International Monetary Fund, Turkey's savings rate last year plunged to the lowest level in the world for any economy larger than $100 billion—except Greece, Portugal and Ireland—as Turks ramped up personal spending and borrowing.

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Some economists warn the government's initiative is a sideshow, saying policy makers should instead focus on overhauling Turkey's arcane tax regulation, and on boosting public coffers by effectively collecting taxes.

"The government should be focused on the Turkish tax code, but that would mean alienating people, and there seems little appetite to do that," said Mert Yildiz, an economist covering emerging Europe at Renaissance Capital, a Moscow-based investment bank.

For some Turks, the government will have to unveil a lot more sweeteners before they part with the family gold. "I'm keen to save, so keeping gold at home is easy for me; there is no complicated procedure," said Ayten Altin, a 70-year-old housewife in Istanbul. "In an emergency, I can convert it to cash and I don't have to wait for the bank to say the asset has matured."

[Neuro]

Bloody hell Turks have an estimated 5000 Tons of Gold in their closets! That is more than IMF or Germany think they have stored in New York!

[osoab]

A little more on Turkey and gold.

Turkey Once Again Proves That Gold Is First And Foremost Money

The Turkish central bank has doubled the amount of gold that lenders can hold in reserves (as opposed to paper money - Lira) as part of their reserve requirement changes. As the WSJ reports, this shift from 10% to 20% means that Turkish banks can use their shiny yellow metal as fungible money reserves against foreign currency deposits. This move follows closely on the heels of our comments on last week's 'gold transfer' efforts in Turkey to unleash some of the country's vast personal holdings of Gold. This effort to draw down on the nation's individual gold reserves - the traditional form of savings in Turkey - is part of Ankara's efforts to reduce a finance gap that is currently around 10% of GDP but more importantly it should serve as a lesson reality-check for Bernanke that gold is money and in the words of a 70-year-old housewife "In an emergency, I can convert [gold] to cash and I don't have to wait for the bank to say the asset has matured." It would seem a better store of value than the Lira over the past decade or two and we suspect incentives will have to rise considerably to 'help' the people part with their savings-gold.

[steyr_m]

A little more on Turkey and gold.

Turkey Once Again Proves That Gold Is First And Foremost Money

Thanks for the post. Plus I learned a new word -- fungible.