If you wish to see what happens with money when true panic hits the streets, we can learn from the recent developments in the Middle East. A report by GoldCore shows that Turkey has exported huge volumes of gold to Iran and a number of Arab countries since the outbreak of the Arab Spring, over a year ago. The sale of gold (and gold jewelry) to Iran rose from $13 million in March 2011, to $480 million a year later. Demand from other instable countries in the Middle East rose three-fold during the same period, according to the report. Insecurity causes people to convert money at risk from currency devaluation to something that holds real value. That something is primarily gold, as these statistics show.
Turkey is a real gold country. Retail ownership of gold is very common, and the value of gold deposits in banks rose 500% over the course of last year. Besides this, the Turkish central bank increased the rate of gold deposits in required reserves from 10% in October 2010 to 20% in March 2012. This gives us a peek into what a sensible central bank should be doing in these times of financial uncertainty.