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The Grand Bazaar may have lost much of its old import, but it is still the largest public gold market in Turkey, a country that, together with China, India and the U.S., currently ranks as one of the world’s top consumers of gold. According to the World Gold Council, last year gold demand in Turkey was 144.2 tons (worth an estimated $7.267 billion), with jewelry comprising 63.8 tons of the total. Image by Dimiter Kenarov. Turkey, 2012.

Carpets, silks, leather, porcelain, copperware, furniture, water pipes, backgammon boards, shoes, shirts, skirts, handbags, headscarves, clocks, candlesticks, glass lamps, mirrors, gems, silver, and gold, gold, gold, gold: This is the Grand Bazaar – Kapalıçarşı – of Istanbul. Founded originally in 1461 by Sultan Mehmed II, eight years after he conquered Constantinople, it became the most important trading center in the Ottoman Empire. Though frequently destroyed by fires and earthquakes, it was rebuilt and expanded, rebuilt and expanded, until it took its present shape: a maze of 64 covered streets and 3,600 shops spreading over a total area of 45,000 square meters, making it one of the oldest and largest covered markets in the world. Today, 20,000 people work here, haggling with up to 400,000 customers daily. The Grand Bazaar is an ancient monster of commerce – pulsing, panting, breathing in the crowds through its 22 gates, breathing them out.

Much has changed in Istanbul and the booming economy of the city has now moved high up into the offices of the shimmering steel-and-glass towers of Levent, on the other side of the Golden Horn, but the Bazaar continues to exert a special pull on tourists and Turks alike, nostalgic for their imaginary Orients. They come here to buy that special carpet and chat with the craftsmen over a cup of tea – a form of human communication that has long ago disappeared in the modern shopping malls – or just wander aimlessly among the network of galleries and look at the wares. But it is the numerous jewelry shops with their brightly-lit storefronts stacked with a dazzling array of treasures that stop customers in their stride. There are solid gold bracelets, delicate platinum necklaces, silver flowers, sapphires, diamonds, rings encrusted with Koranic verses, gold prayer beads. Perhaps the Oriental fairy tales are true, after all.

The Grand Bazaar may have lost much of its old import, but it is still the largest public gold market in Turkey, a country that, together with China and India and the US, currently ranks as one of the world's top consumers of gold. According to the World Gold Council, last year gold demand in Turkey was 144.2 tons (worth an estimated $7.267 billion), with jewelry comprising 63.8 tons of the total. Though local stores are packed with every commodity imaginable, a bit of yellow metal is still the most popular present for weddings or just about any special occasion. Turks love their gold: 14 karats, 22 karats, 24 karats, any karats. In fact, the Turkish jewelry industry is considered to be one of the five biggest in the world, employing 250,000 workers and generating, on top of the revenues from the local market, some $1.474 billion in exports for 2011 alone. That gold ring you wear on your finger: there is a good chance it was manufactured in Turkey.

Gold is the reason I, too, have come to the Grand Bazaar, though neither with the intention, nor with the means to buy. I am more of a gawker, hoping to find out a bit more about the Turkish jewelry market and the current trends in the gold industry – a bit more about the glittering end product of destructive mining. Walking down Kalpakcılar Caddesi, the Bazaar's main thoroughfare and fine-jewelry hub, I move inside a human river of Turks, Europeans, Russians, Arabs, Africans, Southeast Asians. The ancient flagstones underneath have been worn smooth by centuries of feet, centuries of curiosity. Suspended on regular intervals from the vaulted, arabesque-patterned ceiling are flatscreen TVs advertising "The Grand Bazaar's Must Buy." The image of gold jewelry and the word "GOLD" flicker for a moment across multiple screens. But there is hardly a need for advertisement. Hundreds of jewelry stores line both sides of the street, each fancier than the other.

The merchants, most of them men, most of them smartly dressed, stand in front of their stores, inviting customers in or answering questions. I stop by to speak to Ozkan Caglayan, the sales manager of the jewelry store Saray. Though only 36, Ozkan says he's has been in the business since the age of 11 and knows the gold trade inside out.

"A lot of people are buying gold right now!" he mutters with evident excitement in his voice. "Before they didn't know about karats and all that, but now, with gold prices so high, everybody is informed, everybody knows what to look for. It's much easier to sell." I ask him what nationalities buy gold jewelry. "Mostly Turks and Russians and Arabs, but some Brazilians too," he says. "We've had good sales."

A bit further down the street Esra Ozavar, the owner of Topkapi, one of the older jewelry stores in the area, is not as optimistic. Sitting behind a desk with a pack of Marlboro Lights and a coffee, a tabloid magazine spread out in front of her, she tells me that sales have been pretty sluggish lately.

"There was a peak in 2010, but now the market for jewelry is not that great. Turks and Arabs still buy gold, Russians too, but the Europeans can't afford to buy anything these days," she says and then adds with a tired sigh, "Europe is finished."

Esra took over the management of the store after the death of her father, who had in turn inherited the store from his own father, an immigrant from Dagestan who came to Istanbul in 1907. The Topkapı store was opened in 1956 and has since had some illustrious customers, their carefully framed portraits lining the walls under a vaulted ceiling. "We've had Eisenhower here, King Hussein, Grace Kelly, Shirley MacLaine, Haile Selassie, Kylie Minogue," Esra enumerates, pointing at each of the portraits with a mixture of pride and nostalgia for the good old times.

"There were only eight or ten stores in those days," chimes in Veysel Basat, a 75-year-old man with gold-rimmed glasses, who is Esra's business partner at Topkapi. "Now there are hundreds of stores and there is too much competition."

It is not so much the competition, however, that has slowed down the jewelry trade, as much as the current worldwide demand, of which Turkey is inevitably a part, for coins and bars and commodity ETF (exchange-traded fund) accounts as safe haven for investment, instead of jewelry. And indeed, upon a closer look, huddled among the fancy jewelry stores of the Grand Bazaar are smaller, non-descript little shops and kiosks. They look as sterile and boring as bank counters, with rude little men behind them, but it is here that the real trade in gold happens these days. Even when the jewelry stores are empty, these businesses always bustle with customers. There is no place for art or soul here, no craftsmanship or long traditions – just pure utility. Most of these shops sell the regular staples of the two local gold refineries, Istanbul Gold Refinery and Nadir: coins and tiny bars of 1 and 2 and 20 and 100-gram denominations, packaged in special cardboard certificates just like SIM cards. As a matter of fact, Turkey has now been ranked the biggest producer of gold coins in the world.

"Everybody is buying gold these days," one of the sellers, who refuses to identify himself, tells me. "People from villages still buy jewelry, but the really smart people buy coins and bars."

In 2011 Turks bought 80.4 tons of gold for investments, which was a 99 percent increase from the previous year, while the local jewelry sector has actually experienced a 10 percent decline in demand. Jewelry might be still an important part of Turkish traditional culture (by some estimates, Turks keep about 5,000 tons in gold, worth $270 billion, outside of the banking system), but there are also plenty of signs that it is gradually dying out, as people and banks rush to secure their savings in less aesthetic, but more serviceable gold forms. Just a few months ago the Turkish central bank allowed commercial banks to keep up to 20 percent of their reserves in gold, further ratcheting up demand.

"We used to supply a lot of gold to the jewelry industry, but jewelry demand has gone down," Erman Donmez, a board member of the Istanbul Gold Refinery, told me in a recent interview. "Now the end product has become the starting point, so to speak. We buy a lot of scrap jewelry from the public in order to turn it into fine gold, so people can keep it in the banks and receive interest on it. There is no benefit to keeping jewelry – it's not in the economy. What we are trying to do is inject money in the economy."

Gold mining companies and speculative investors might be benefiting from the higher prices of gold these days, but the Turkish jewelry industry, with its 250,000 workers, is not. As Alaattin Kameroğlu, the president of Istanbul Chamber of Jewelers (IKO), has said in a recent interview: "We really wish gold prices would start falling again and that people would start buying jewelry," adding that Turkish jewelers are only working at around 10 to 20 percent of capacity, a non-sustainable rate.

Could it be that, with global gold trade thriving, the jewelry sector is paradoxically on the decline? Warren Buffet has called gold a "sterile asset," its use limited to decorative and a few technological applications, with no real added value in the wider economy. King Midas, after all, could neither eat nor drink gold. A quarter of a million Turkish jewelers would probably disagree with that kind of logic, but maybe not for long. Gold, is seems, is slowly killing not only the environment, but its own shiny darling, the jewelry industry, as well.

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