Gold fever: Gold deposit accounts in Turkey almost double in 2019

Published 03.02.2020 17:36

Gold deposit accounts in Turkey almost doubled in 2019 compared with the previous year, while citizens went on to increase their Turkish lira and U.S. dollar deposit accounts as well.

A boom in the demand came amid both regional and domestic developments and resulted in a 98.5% year-on-year surge in gold deposit accounts. Citizens' gold deposit accounts jumped to nearly TL 76.1 billion as of December 2019, up from some TL 38.34 billion in 2018, according to data compiled from the country's banking watchdog, the Banking Regulation and Supervision Agency (BDDK).

Central banks and investors had bought large amounts of gold earlier in the last year, helping push gold prices up 18% in 2019 to the highest level since 2013.

Gold is often seen by investors as a safe investment during times of political and economic uncertainty and becomes more popular when interest rates fall, as they did last year.

A combination of events that constituted fears for the global economy's outlook, including a trade dispute between the world's two largest economies, the U.S. and China, a slowdown in the global economic growth and Brexit has led to many investors becoming more optimistic about the precious metal's prospects.

Gold made a rapid start in 2020 and rallied sharply, resulting in it posting its best month in five months in January, a month that witnessed multiple major developments such as Iran-U.S. tensions and the ongoing coronavirus outbreak that the World Health Organization (WHO) recently declared a global health emergency.

It eased Monday, however, looking strong above the $1,570 an ounce level, amid a plunge in global stocks, dragged by a plunge in the Asian stocks on their first trading day after a long break, on fears over the economic impact of the coronavirus outbreak in China. Gold slipped nearly 1% to $1,574.5 an ounce at mid-day trading yesterday.

The average gold deposit of a Turkish citizen is said to stand between TL 50,000 and TL 250,000. There is a TL 30.83 billion worth of gold deposit account at this level.

It is a noteworthy fact that the gold millionaires' deposit more than doubled over the course of the year. Their gold deposit accounts skyrocketed by 120% year-on-year in 2019 to a total of TL 9.99 billion, up from TL 4.54 billion in the previous year.

On the other hand, Turkish lira deposit accounts totaled TL 730.45 billion in December 2019, a 13.5% increase compared to TL 643.29 billion a year before, the data showed. Dollar deposit accounts were also up 20.4% and amounted to nearly $108.1 billion, up from $89.76 billion in 2018.

Over 45,000 Join Millionaires Club

In the meantime, the number of deposit holders with at least TL 1 million or more in their bank accounts increased by 45,314 in 2019 compared with the previous year, reaching a total of 225,440, according to BDDK data. The same figure stood at 192,903 in 2018.

The total deposit of the said millionaires has reached over TL 1.39 trillion last year, up from TL 1.11 trillion in 2018

The average deposit amount per millionaire, which was TL 6.16 million in 2018, increased to TL 6.17 million at the end of 2019.

CBRT Leader Among Central Banks in 2019

On the other hand, central banks and other sovereign entities bought 650.3 tons of gold last year, just 5.9 tons less than 2018's more than 50-year high of 656.2 tons, according to the World Gold Council (WGC). Total gold reserves have increased to 34,700 tons.

2019 marked the 10th year in a row in which the global central banks increased their gold reserves. They have bought a total of some 5,000 tons of gold over the last decade.

The Central Bank of the Republic of Turkey (CBRT) with the 159 tons it purchased in 2019 led the way among global central banks. It was followed by Russian and Chinese central banks with 158 tons and 96 tons.

This enabled Turkey to jump and rank 14th, from 21st rank in 2018, among the countries with the largest gold reserves and the share of its reserves in the total reserves has reached 20%.

Gold Output Peak in 2019

Turkey's gold production in 2019 peaked at 38 tons, according to the Turkish Gold Miners Association.

Estimates point to it reaching 45 tons by the end of this year thanks to encouraging private sector investments and the number of production facilities that became operational at the beginning of 2020.

Turkey produced a total of 338 tons of gold between 2001 and 2019; however, based on scientific studies, potential reserves total 6,500 tons, from which 1,500 tons have been extracted so far, according to the association.

Precious metal deposit accounts of commercial and other institutions also witnessed a major increase last year, reaching around TL 4.87 billion in December 2019. Therefore, their gold deposit accounts surged by 130% year-on-year compared to TL 2.11 billion in December of 2018.

Their total precious metal deposit accounts have thus reached TL 80.97 billion, doubling from TL 40.45 billion.

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