16.05.2025 16:00
Following the consecutive declines in gold prices, the Ministry of Treasury and Finance made a notable move. The ministry decided to directly sell a one-year gold bond and gold-backed lease certificate on May 20.
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The Ministry of Treasury and Finance will sign the direct sale of gold bonds and gold-backed lease certificates next week.
According to the internal debt issuance calendar published by the Ministry, the direct sale of a gold bond with a maturity of 1 year (364 days) and semi-annual coupon payments will take place on Tuesday, May 20. On the same day, the direct sale of a gold-backed lease certificate with a maturity of 1 year (364 days) and semi-annual lease payments will be carried out.
WEEK OF DECLINE IN GOLD PRICES
Signals from macroeconomic data regarding the effects of U.S. customs tariffs and statements from Federal Reserve (Fed) Chairman Jerome Powell have influenced asset prices.
On the macroeconomic data front, the Producer Price Index (PPI) in the U.S. decreased by 0.5% month-on-month in April, while it increased by 2.4% year-on-year, falling below expectations.
For the first time since October 2023, a monthly decline was observed in producer prices, and annual producer inflation recorded its lowest level since September 2024. Following the announced data, the price of gold per gram fell below 4,000 lira. Currently, in the free market, the price of gold per gram is trading at 3964.0 lira.
WHAT IS A GOLD BOND?
A gold bond is a government-backed investment instrument issued by the Ministry of Treasury and Finance to bring individuals' physical gold into the financial system, providing interest income. These bonds offer investors the opportunity to benefit from the appreciation of gold's value as well as to earn interest income at regular intervals.
HOW DOES IT WORK?
Investors deliver their physical gold to authorized banks such as Ziraat Bank. In exchange for the delivered gold, a gold bond issued by the Treasury is given to the investor. These bonds typically have a maturity of 2 years and pay fixed interest every 6 months. At the end of the term, the investor can choose to retrieve their gold or receive cash.
WHY IS IT PREFERRED?
- It is government-backed, making it a safe investment instrument.
- It preserves the value of gold while providing additional interest income.
- There is an option to redeem it as physical gold at the end of the term.
- Encouragement is given for bringing gold kept under the mattress into the economy.
WHO IS IT SUITABLE FOR?
A gold bond is an ideal product for individuals who want to earn income instead of storing their gold, risk-averse investors, and savers planning for the long term.
WHAT IS A GOLD-BACKED LEASE CERTIFICATE?
A gold-backed lease certificate is an investment model where individuals deliver their physical gold to banks and receive gold-indexed returns with government guarantees in return. In this model, the investor lends gold to the Treasury, and in return for using this gold, the Treasury makes lease payments to the investor at regular intervals.
HOW DOES IT WORK?
The investor delivers 14 and 22-carat gold jewelry to certain banks.
In return, they are given a lease certificate.
This certificate typically has a maturity of 2 years and pays lease income every 6 months.
At the end of the term, the investor can retrieve their physical gold or receive cash.
WHAT ARE THE ADVANTAGES?
- It is interest-free: It complies with the principles of participation banking.
- It is government-backed: It is issued by the Ministry of Treasury and Finance.
- It provides income: In addition to the value of gold, lease income is obtained.
- It is exempt from tax: No income tax withholding is applied.
- Physical gold can be retrieved: It is optional at the end of the term.
WHO IS IT SUITABLE FOR?
A gold-backed lease certificate is an attractive option, especially for interest-sensitive investors, those who want to evaluate their savings with gold, and individuals seeking safe investments.
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