• Turkey has a long tradition of gold demand; we expect this to continue. Turkey’s relationship with gold is underpinned by a deep cultural heritage. In the jewellery fabrication industry it is a medium of exchange and a unit of account: in the Grand Bazaar – the heart of Turkey’s gold market – rents are priced in gold. There is a strong economic incentive to own gold too. Generations of Turkish savers have turned to gold as an effective hedge against the ravages of inflation and currency weakness.
• Its gold mining industry is small, but growing quickly. Turkey has an expanding gold mining industry with significant untapped potential. Gold production has increased in almost every year since 2001, growing from 2t to 33.5 t in 2013. And this may be the tip of the iceberg: Turkey’s Ministry of Energy & Natural Resources estimate gold reserves to be 840t.
• Gold’s value chain makes a significant contribution to Turkey’s economy. In 2012 alone, gold fabrication[1], consumption and recycling added at least US$3.8bn to Turkey’s economy. The value chain supports 5,000 gold fabricators, 35,000 retail outlets and employs about 250,000 people.
• Gold is a small but important cog in Turkey’s financial system. By the end of 2013, commercial banks held around 250t, equivalent to US$10.4bn[2], which had been put to work supporting Turkey’s economy. Most of this was from investors switching Turkish lira and foreign currency into gold accounts. But it also includes 40t - about US$1.7bn - of Turkey’s “under-the-pillow” stock, which has been mobilised since mid-2012.

[1] Fabrication demand is the first transformation of gold bullion into a semi-finished or finished product.

[2] Unless specified we use the average price for H1 2014 of US$1,291 per ounce when calculating values.