Why are people in Turkey hoarding gold?

0:00Up First from NPR News is your way to slow down a fast-moving world and make sense of it. which is just what tech leaders say they need right now. One of the big stories this week is that tech leaders say they want to slow down AI development. Also, the latest fighting in the Middle East could push oil prices even higher. Start your day with what you need to know on Up First. Listen on the NPR app or wherever you get your podcasts. Today on State of the World, why are people in Turkey hoarding gold?

0:33You're listening to State of the World from NPR, a human perspective on global events. I'm Greg Dixon. We'll hear about why many Turks are sitting on a stash of gold in a couple minutes. But first, are Russia and Ukraine going to stop attacking each other's energy sites? President Trump claims they are, but neither country has said they've formally signed off on such a deal. NPR's Joanna Kikisis in Kiev explains what's going on. For months now, Ukraine has been launching its own long-range drones deep into Russia. These drones have repeatedly hit Russian oil refineries and other energy sites in an attempt to weaken Russia's ability to wage war on Ukraine.

1:16The strikes have caused fuel shortages in Russia, the world's second largest producer of diesel. The Kremlin has banned diesel exports because of domestic fuel shortages, and that's driving up prices. President Trump appeared to blame Ukrainian President Volodymyr Zelensky for the price hikes while speaking to reporters this weekend in Ireland. Mr. Zelensky has to do one thing. He has to stop knocking out diesel fuel in Russia. Let him go after targets, but not diesel fuel, because he's causing a shortage of diesel fuel. This isn't done by the Middle East. This is done by what's happening with Russia and Ukraine.

1:54Now, the The Kremlin said it welcomed Trump's call for Ukraine to stop the strikes, while saying it was instability in the Middle East that was actually driving the diesel crisis. Trump later claimed Ukraine and Russia had both agreed to stop hitting energy sites. The Kremlin did not respond. But in his evening video address on Monday, Zelensky said Ukraine was ready to stop striking Russian energy sites as long as Russia stopped attacking Ukraine. He said, if our American partners can secure a real commitment from Russia to end this war of annihilation, then Ukraine will de-escalate. It's NPR's Joanna Kakissis in Kyiv.

2:36In Turkey, gold is the go-to gift for life's major milestones. And another cultural tradition is stashing that gold safely in your house, just in case. It's a way Turks protect themselves against the country's sometimes volatile economy. But officials say all this gold hoarding is a problem. It's hurting Turkey's financial future. NPR's Hedil Al-Shalci takes us to Istanbul. It's early at the Mahmud Pasha Yokosho market in the heart of Istanbul. Store owners call out their wares as shoppers dart in and out, snatching up everything from kitchen gadgets to blankets to wedding dresses. Bride-to-be Nefisa Asker says she's having to find six outfits that she'll change into over her days-long wedding this September.

3:27I'm trying to find the one I'll wear during my wedding photo shoot, she says. Along with the dresses, the 23-year-old says she can't wait to get the staple of Turkish wedding gifts, gold. We'll share the gold as a couple to support our new life together, she says. Historically, the gold was sometimes financial insurance for wives who didn't work. Selva Demirap is an economist and used to work for the Turkish Federal Reserve. If everything goes south, you still have your gold that is gifted to you during your wedding, and that will be your lifetime savings. Over his 50 years as a gold seller at Istanbul's historic Grand Bazaar, Mehmet Yildirim Turk has seen a lot of brides.

4:12He's sitting in his cramped store inside the bazaar, counting gold coins on his glass countertop. A fan blows hot air around as he explains why so many people hold on tight to their gold. It's a vital tool for Turks. It helps protect them, especially from inflation, he says. Inflation is a chronic problem here. Turkey has one of the highest rates in the world, now hovering around 31 percent annually. Daily living costs have become more expensive. In contrast, gold is less volatile and prices are at an all-time high. Yıldırım Turk says stashing their gold is literally a financial cushion for Turks.

4:55We call it yastik altı, which translates to gold under the pillow. The finance minister says there's almost 5 ,000 tons of gold stored in Turkish households today. That amounts to about$600 billion, according to the governor of the Central Bank of Turkey. And that's a lot of money kept idle, says economist Demirap. It's not being lent out to businesses. And also, a good chunk of the gold has to be imported every year, which adds to the current account deficit. So it's capital that's parked rather than working. And if all that money went back into the banks, she says regulators could have a chance to do their job and restore consumer confidence.

5:36There is going to be more trust in the economy. There is going to be more investment. And eventually that would lead to more jobs and less unemployment. Turkish President Recep Tayyip Erdogan has been trying for years to get citizens to deposit their physical gold into the banks, like during this 2023 speech to his cabinet. it.

5:58This brings no benefit to either my people themselves or to my state, he says. Erdogan's increasingly strong-handed economic policies haven't helped either. He's fired six central bank heads over the last seven years. Back in the Grand Bazaar, gold seller Yildirim Turk says mistrust of Turkey's banks runs very deep these days.

6:21The gold just isn't coming out from under their pillows, he says, the government just hasn't been able to provide that confidence yet, he adds. Bright to be, Nafisa Askel, shopping for her dresses, says she won't be putting any of her gifted gold in the bank. She says it's not going under a pillow, but will definitely be hidden in a box at home. Hedil Alshalci, NPR News, Istanbul.

6:52that's the state of the world from npr thanks for listening this is tanya mosley co-host of fresh air 10 years ago colin kaepernick took the knee during the national anthem and it cost him his nfl career he's rarely talked about it since now he tells the story of that decision and why he still trains every day to play. But I am not at the point of accepting I will never step on a field again. Listen on the NPR app or wherever you get fresh air. On the next through line from NPR. Let's listen to Josh Reddick's new walk-up song. Whether you love it or you hate it, walk-up music has become a huge part of Major League Baseball.

7:31The need to secure the attention of the fans is relentless. I thought, am I hearing things? I mean, I realize everybody's singing along. Listen to NPR's ThruLine in the NPR app or wherever you get your podcasts.