In Istanbul’s Grand Bazaar, Demand for Gold and Dollars Soars

ISTANBUL—Deep in the stone warren of Istanbul’s 560-year-old Grand Bazaar, a cluster of traders selling gold and dollars pace the alleyway, murmuring into phones and smoking. The tension rises as demand grows. A shout comes from the crowd: “I’ve got it ready!”

Turks are pouring money into foreign currency, gold, cryptocurrency, jewellery and other assets that they see as a safer bet than the Turkish lira, which has lost more than 80% of its value in the past five years.

“There’s an atmosphere of panic,” said Mustafa Demiray, 39, a currency trader standing on the edge of the crowd and clutching two phones. “People think the price [for dollars] will go up, so there’s a higher demand right now.”

The collapse of the lira is the result of an era of economic mismanagement by Turkish President Recep Tayyip Erdogan, economists say. The Turkish leader in recent years has pressured the central bank into cutting interest rates despite the country’s high rate of inflation—the opposite of what central banks would usually do.

Erdogan has attempted to adjust course since winning a close election in May in which his opponents attacked him over Turks’ purchasing power, with many people cutting back on meat, fish and even vegetables.

The country’s newly appointed central-bank governor, Hafize Gaye Erkan, and Finance Minister Mehmet Simsek have raised interest rates, but too slowly to get inflation under control, analysts say.

The Turkish lira continued to slide after the central bank’s July meeting, in which officials decided to raise interest rates by a mere 2.5 percentage points, a move that slowed the pace of the rate increases and put the lira under further pressure. The decision disappointed some economists and investors who hoped Simsek and Erkan would be more aggressive about tackling inflation.

Erkan on July 27 raised the bank’s year-end inflation forecast to 58% from 22.3%, while predicting that price increases would slow next year. Analysts said the upward revision was an acknowledgment that the bank’s current stance was unlikely to tame inflation, which is running at 38%.

Erkan said the bank would lift rates further, and would adopt a holistic approach to tackling inflation, including using other policy instruments such as quantitative tightening.

Investors and analysts are concerned that Erkan and Simsek don’t have a genuine mandate from Erdogan to do what is needed to stabilize the Turkish economy. Erkan pushed back on those questions on July 27.

“The central bank of the Republic of Turkey is an independent institution,” she said. “We will continue the increases in interest rates alongside the quantitative tightening alongside the selective credit tightening because that’s what the current situation demands.”

Turkey’s economic turmoil has put pressure on the traders at the Bazaar, who have played a central role in the economy since the vast covered marketplace was built during the days of the Ottoman Empire, more than five centuries ago. The small and midsize shops in the Bazaar are part of a sprawling global network of businesses and banks dealing in gold and currency.

Mehmet Akif Turker, a 44-year-old gold trader, sat in his office at the Bazaar on a recent morning, his phone and two slabs of gold on the desk in front of him. The high demand for gold should be good for his business, he explained, but the turmoil in the Turkish economy isn’t.

Turks and other traders must contend with a complex web of rules imposed by the government in recent years to scare up foreign currency and keep the country from tipping into insolvency. Those include a rule that forces businesses like Turker’s to convert 40% of their foreign-currency earnings into lira, traders say.

“In general, in our line of work, crisis makes money,” Turker said. “But when the dollar fluctuates so much and the market is so unstable, it can bring us profit or it can bring us losses. We are exhausted.”

Despite the government’s efforts to bring gold and other assets out from “under the mattresses” of the country’s citizens and into the financial system, Turks continue to pour money into precious metals, traders say. Industry groups estimate that between $200 billion and $300 billion worth of gold is in Turkish citizens’ private possession.

“We are a country that loves gold as a financial instrument,” said Ercan Doner, 39, who owns a shop selling gold coins and jewellery. “In order to stop their money from melting away in case of inflation, people are trying to make use of their gold investments by continuously buying and selling.”

Volatility in the economy isn’t the only driver of gold sales, vendors say. The pandemic also increased business, said Metin Kocatepe, 54, a salesman from another jewellery shop.

“After corona, people’s mentality changed. They’re more relaxed in their shopping. They say ‘maybe tomorrow I’m gonna die, I’ll buy something nice.’”

For decades, the world’s computing power has quietly expanded at an astonishing pace.

From the first transistor developed at Bell Labs in 1947 to modern processors containing billions and even trillions of transistors, each generation of technology has been faster, smaller and more powerful than the last.

But according to quantum physicist and technology entrepreneur David Reilly, that era of effortless progress is beginning to slow.

Reilly, CEO of Sydney-based Emergence Quantum and Professor of Physics at the University of Sydney, says the computing infrastructure underpinning modern economies is approaching fundamental physical limits.

And that could have enormous implications for finance, artificial intelligence and global investment.

Speaking at an industry event organised by Kanebridge International, Reilly said many critical parts of modern society depend on computing and the infrastructure used to process information.

The slowdown behind the tech boom

For years, the technology industry relied on a steady improvement known as Moore’s Law, where the number of transistors on a chip doubled roughly every two years.

More transistors meant more computing power, allowing faster software, smarter devices and ever-larger data systems.

Today, however, those gains are slowing.

“It feels to me very innate that I’m going to just find that next year there’s going to be another breakthrough,” Reilly said.

“But if you look at the data…there’s a slowing down, a roll off in performance that started some 10, 20 years ago.”

Rather than making chips dramatically faster, manufacturers are now largely increasing computing capacity by packing more transistors onto each processor.

The approach works, but it comes with growing complexity, higher costs and increasing energy demands.

The brute-force race for AI

That challenge is already visible in the massive data centres being built to support artificial intelligence.

In the race to dominate AI, companies are constructing vast computing facilities that consume huge amounts of electricity and water. Reilly described this expansion as a “brute force” approach driven by the global competition to develop advanced AI systems.

Yet the demand for computing power continues to accelerate.

Artificial intelligence, advanced robotics, healthcare research, pharmaceuticals and cybersecurity all require far more processing capacity than today’s systems can easily deliver.

The question now facing the technology sector is whether traditional computing can keep up.

Enter quantum computing

That is where quantum computing enters the conversation.

Unlike conventional computers, which process information using binary switches that represent ones and zeros, quantum computers exploit the unusual behaviour of particles at the atomic scale.

Reilly describes them as a fundamentally different type of machine.

“So a quantum computer is a wave computer,” he said.

Instead of processing information through simple on-off switches, quantum systems can use wave-like properties of particles to process many possible outcomes simultaneously.

Those waves can interact in complex ways, reinforcing correct solutions while cancelling out incorrect ones. In theory, this allows quantum systems to tackle certain types of problems dramatically faster than classical computers.

What it could mean for finance

The concept may sound abstract, but its potential applications are significant.

Quantum computers are expected to transform areas such as materials science, chemical modelling and pharmaceutical development.

They could also help solve complex optimisation problems in logistics, finance and risk management.

For financial institutions in particular, the technology could offer new tools for detecting fraud, analysing market behaviour and optimising portfolios.

But the shift will not happen overnight.

“One message to take away is that quantum is not going to suddenly solve all of your problems,” Reilly said.

Instead, he said quantum systems will likely complement existing computing technologies as part of a broader and more diverse computing ecosystem.

Why data centres may soon “go cold”

One key change already emerging is how computing systems are physically designed.

Many next-generation technologies, including quantum processors, operate far more efficiently at extremely low temperatures. As a result, future data centres may rely heavily on cryogenic cooling systems to manage heat and energy consumption.

Reilly believes that the shift will gradually reshape the computing industry.

“Over the next five years, you’re going to see data centres go cold,” he said.

“And as that happens, they almost drag with them new compute paradigms.”

Emergence Quantum, the company he co-founded, is focused on developing technologies to support that transition, including cryogenic electronics and integrated hardware platforms designed for quantum computing and energy-efficient systems.

A new technological era

For investors and businesses, the technology remains in its early stages. But the scale of global interest is growing rapidly.

Governments, research institutions and technology companies are investing heavily in quantum research, betting it could become a foundational technology for the next generation of computing.

For Reilly, the moment feels similar to earlier technological turning points.

In the 19th century, new discoveries in thermodynamics helped drive the development of steam engines and the Industrial Revolution. In the 20th century, advances in electromagnetism led to radio, television and eventually the internet.

Quantum physics, he suggests, could represent the next chapter in that story.

“Today we have, as a society, in our hands new physics that we’re just beginning to figure out what to do with,” Reilly said.

“But I think it’s an exciting time to be alive and watch what happens over the coming decades.”