CBRT Governor Karahan had blamed the poor economy on 'under-the-mattress gold': 'Misquoted' statement arrives

CBRT Governor Fatih Karahan stated that his remarks regarding "under-the-mattress gold" made during a program were misquoted on social media, saying, "My speech did not hold our citizens responsible for inflation. On the contrary, it expressed that price stability is one of the most important factors that will reduce the demand for under-the-mattress gold."

Responding to claims that "under-the-mattress gold weakens the fight against inflation," Karahan said that his speech at a program in recent days was misrepresented on social media.

Recalling that he was a speaker at a panel on global macro-financial stability in the Netherlands last Friday, Karahan spoke as follows:

"In this speech, I emphasized the changing role of the dollar, the recent depreciation of the dollar, the resulting global demand for gold, and the recent increase in gold prices caused by this. I emphasized that the depreciation of the dollar is a positive supply shock in developing countries, meaning it strengthens growth while lowering inflation. Normally, in developing countries, the depreciation of the dollar means both stronger growth and lower inflation."

Stating that he mentioned that this movement in the dollar could have different effects for Turkey during this period, Karahan said that it is estimated there is a significant stock of gold held under the mattress.

Pointing out that their estimates indicate the under-the-mattress gold stock is in the range of 400-500 billion dollars, Karahan noted the following:

"When we look at various institutions, domestic or foreign, they reach similar estimates in their analyses using similar data with different methods. There are also those who claim it is higher. In general, it is estimated to be in the range of around 400-500 billion.

The wealth effect of the price increase in the last year exceeds 100 billion dollars. The increase in gold prices also supports consumption demand through this wealth effect channel.

This is not something I just said. We had research on this subject. We shared this on our website with a blog post in May.

I actually shared these findings at the panel in the Netherlands last week. I did not make a new communication. My speech in no way held our citizens responsible for inflation.

On the contrary, I was expressing that price stability is one of the most important factors that will reduce the demand for under-the-mattress gold. Because the reason for having such a high gold stock in Turkey is the inflationary experience from the past."