The crisis that the Turkish lira experienced over the period from 2016 to the first half of 2021 in general, and the second half of 2021 in particular, cast a negative shadow on the capabilities of the Turkish economy, and created a state of confusion in its overall indicators, and it is natural for the savings sector to be affected in a way big.
And the depreciation of the lira means a decline in the value of the wealth of savers, one of the most important functions of money is that it is a store of value and a measure of wealth, and if this function is shaken, or out of balance, people rushed to search for a safe haven for their savings, and since the first alternative to the local currency, is foreign exchange, it has Some turned to it, and others feared it, due to speculative considerations, and the instability of its value in the medium and long term.
But the best alternative for a large sector of savers in Turkey and other countries of the world is gold, so the Turks turned for a long time to acquire gold to secure their savings, especially in 2020 and 2021, so that some gold traders estimated the volume of their sales in the months of 2020 to be 10 times what It was before.
Turkey's gold wealth
The data available on the website of the Ministry of Energy and Natural Resources in Turkey shows that the mining activity in gold began in 2001, and that about 2.5 billion dollars were pumped by local and foreign investors, and that the mining activity in the field of gold provides 6,200 direct job opportunities, and about 25 thousand opportunities. Indirect action.
However, Fatih Donmez, Minister of Energy and Natural Resources of Turkey, stated in early 2021 that his country has invested about 6 billion dollars in exploration and extraction of gold, and that the sector accommodates 13 thousand and 200 workers, and that Turkey has 18 mines to produce gold, and there are other projects, on the way to work in new mines. .
The ministry's data also indicate that Turkey's annual gold production in 2019 amounted to about 38 tons, and that it has gold reserves representing 0.5% of total global reserves, and it also owns 2% of gold resources.
Recently, the Minister of Energy stated that Turkey produced 40 tons of gold by the end of 2020, and that his country aims to increase gold production to 100 tons, and that Turkey's gold imports in 2020 amounted to 25.2 billion dollars.
Turkey is one of the most important importers of gold in the world, as its average annual import for a long time has been up to 156 tons, but in 2018, Turkey's gold imports witnessed a huge boom, with imports this year reaching 324 tons.
Turkey's exports of gold jewelry range between 5 and 7 billion dollars, and therefore it becomes clear to us that the trade balance for gold is creating a deficit for Turkey.
There is an important observation, through which it is possible to extrapolate the future of Turkey’s wealth from gold, which is that when Turkey relied on foreign companies to explore for gas and oil, they obtained a result of the absence of oil and gas wealth, but years later, when the matter was assigned to local companies, and experiences Governmental, gas wells were discovered in the Black Sea, as well as oil wells in the eastern regions of the country.
Which can be expected, with Turkey focusing on local companies, and the expertise of universities and research centers in the detection of gold and other minerals, which leads to achieving the target of the Ministry of Energy and Natural Resources, of producing 100 tons of gold annually.
Turkey produced 40 tons of gold by the end of 2020 (Al-Jazeera)
Chunky savings
More than once, Turkish President Recep Tayyip Erdogan called on his citizens (both ordinary individuals and businessmen) to keep their savings in the local currency, and to introduce the money hoarded in homes in the form of gold savings into economic activity. The Turkish President estimated the hoarded savings of gold "under the pillow" at about 5 thousand tons, And the equivalent of 280 billion dollars.
The importance of President Ardoan's call and alerting him to this matter is that these funds are almost frozen to a large extent, and economic activity does not benefit from them, and there are some transactions for those who are in a state of necessity, so they sell their jewelry or other things.
But the large proportion retains its gold, and if half of this amount was converted into the local currency - that is, approximately 140 billion dollars - it would have had a positive impact on the Turkish economy already, but the investment paths remain that can benefit from these funds if they convert to the local currency .
It is known that savings in the banking system is the mainstay of financing public and private investments. The World Bank estimates, through its database, the saving rate in Turkey as a percentage of GDP by about 27%, which is less than what is required to finance Turkey's investments and achieve high growth rates.
If Turkey wants to achieve an annual rate of about 7%, it should reach an investment rate of about 35% as a percentage of GDP.
In the event that the savings rate of Turks remains at 27%, as a percentage of GDP, this means that reliance on loans will be an alternative to cover this gap, otherwise Turkey will not reach its growth rate targets.
It is worth noting that the saving rate as a percentage of output in Turkey is lower than what is achieved in other countries, such as India 31%, South Korea 36%, or China 45%, according to data for 2020.
Ingredients for the success of Erdogan's call
After the failed coup attempt by some of the military in Turkey in 2016, President Erdogan appealed to the citizens to transfer their savings from foreign currencies to the local currency, and he himself began to transfer his bank balance from hard currencies to the local currency, and not a few citizens responded to him, and they transferred About 10 billion dollars in local currency.
The call has been repeated recently, repeatedly, after the crisis experienced by the Turkish lira, especially in the second half of 2021, and in order for Erdogan’s call to succeed, and the citizens to respond to it, several conditions must be met, including:
That the government succeed in more effectively activating its last mechanism to guarantee the deposits of savers in banks, and that the experiment enjoys the confidence of a large sector of citizens, so that they can obtain a rewarding return, or at least an appropriate one, that covers the inflation rate, and makes them feel that there is a positive surplus achieved by transferring their golden savings to local currencies.
For the government to open doors for investment, based on participation and not the interest rate, and it can succeed in attracting owners of gold savings, and tempting them to enter them, instead of hoarding gold, and it is preferable that these investments be long-term, whether for owners of current golden savings, or potential savers, To attract them before they go to buy gold and keep it at home or in bank vaults.
It would be better, if the government did this, after the crisis, so that society feels that it is part of its economic and social system, and not just a temporary solution to which the crisis situations forced them, and it would be complete for this if President Erdogan, senior officials, members of the Justice and Development Party, and men His works, they adopted a campaign for this, and they were at the forefront of converting what they had of gold to the local currency.
In conclusion, many things will be determined in Turkey and other countries, during 2022, based on the expectations of the performance of the global economy, during this year, especially in the first half of it. Will oil prices drop, after the end of the harsh winter in Europe, and thus the inflationary wave subsides, Are interest rates declining? Will global growth regain its positive growth rates?
Will the “Covid-19” mutants be controlled?All of these things will prepare for the success of Erdogan's call to transfer savings from gold to the local currency, or vice versa.