Turkish citizens seek refuge in gold and stablecoins amid rising 67% inflation rate

According to the latest inflation data for February 2024, Turkey is facing an inflation rate of over 67%, in a context of ongoing currency devaluation and the fall of the lira against the US dollar. Recent discoveries suggest that, in an effort to safeguard their wealth, Turks are increasingly turning to gold, with smuggling reaching unprecedented levels. Furthermore, there is a growing interest among Turkish citizens in protecting their assets through cryptoassets, particularly those stablecoins pegged to the dollar.

Record gold smuggling in Turkey reflects the deepening currency crisis; Lira closes ties with stablecoin assets

This week, a report was released highlighting that gold smuggling in Turkey has reached new highs, with authorities seizing 350 kilograms of gold this year. Due to quotas set by the Turkish government on gold imports, there is a growing demand for this valuable metal as the country’s currency, the lira, continues its sharp decline.

This intense demand for gold and safe assets, aimed at preserving the dwindling wealth of Turks, has catapulted gold prices to a 7% premium over the world weighted average, according to the report.

In a context of substantial economic deficit, Turkey faces increased spending on imports, which leads to inflated prices for raw materials and services. Furthermore, an exceptionally loose monetary strategy, combined with a supposed containment of interest rates, further diminished the value of the Turkish lira.

“Nowadays there are almost no [gold] sellers,” said Mehmet Ali Yildirimturk, vice president of the Istanbul Jewelers, Goldsmiths and Money Exchangers Association, in the report published Thursday.
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