A golden opportunity (?)…

Given the fact that we all got our shares of excitement prior to the release of CBRT decision today, I’d like to talk about something else so that we can clear our heads a bit; since you know, whatever will be will be. For now, let’s focus on other things.

I’ve been warning you about the gold trend for a while now as I have personally witnesses how it caused investors to suffer great losses for 27 years, right after its sharp rise following the Iran–Iraq War. However, in Turkey, things went a little bit differently.

After the 1980s, Turkey went through some hard times, especially in terms of achieving economic stability. Exchanges rates showed sharp upward trends after a long period of calmness. The most recent example of this phenomenon took place in 1994, with a rise by 300%, and in 2001, with another sharp rise by 236%. Gold gained a great TRY-denominated value for almost 30 years in Turkey while it was depreciating or remaining stable in other parts of the worlds.

Gold, always considered a life-saver in difficult times, gradually became a traditional investment instrument, thus, the generation born between 1945 and 1965, who bought plenty of gold back in the day, had the chance to grow their savings. I remember clearly: I was visiting a small town in Anatolia. One of the residents came to me and said, “I will be forever grateful to your father”. Then, he told me how things have transpired.

“Profitable for Turkish investors, but a bit risky for foreigners…”

The person I mentioned above told me that he sold all of his lands for almost a fortune, and then migrated to a bigger city in 1985. One day, in a coach station in Anatolia, he meets my father unexpectedly and asks him where he should invest money. My father suggests him that he should invest in gold, knowing that the man doesn’t want to deposit money in a bank account to earn interest because of his religious beliefs. Apparently, this man did exactly as my father suggested. “I made a fortune thanks to him”, he said, when he met me by chance 20 years after he met my father.

Normally, my father would not offer investment advice to anyone. He must probably have got tired of the man’s insistent nature. Back in the day, it wasn’t as easy to buy foreign currency as today. People didn’t have any idea how the stock market operates. Most people didn’t want put out money at interest. So, there were only a few options left and one of them was Gold. This man who had apparently no other option but to invest in gold made a lot of money, since gold appreciated 24-fold in exactly 20 years. It is a rare phenomenon, indeed.

Today, foreign financial institutions are suggesting that Gold will go up again, which, to be honest, makes me feel uncomfortable; because gold has recently suffered a sharp fall after an upward trend. Although maybe not for Turk, but Gold, as an investment instrument, seems too risky for foreign investors. I’ve always been, and I think I will always be hesitant about whether I should tie up all my money in gold or dollar.