A Reuters report said that gold has become out of reach for many with the significant rise in its prices, and that silver has become the preferred choice for Egyptians to confront the effects of inflation.
According to the agency, fluctuations in the parallel currency market in Egypt and the expected decline in the value of the pound (the local currency) led to a state of chaos in gold trade, which prompted some people to resort to silver as a means of preserving the value of their savings.
The pound has fallen nearly 50% against the dollar since early 2022, as the country faces a growing shortage of foreign currency inflows.
But it collapsed on the black market, at a time when Egyptians sought to protect their savings by buying dollars, precious metals, and real estate.
In a country where it is estimated that about 60% of its 105 million population live below or near the poverty line, only a few of them can afford to invest in high-end real estate whose sales are booming, as Reuters says in its report.
The price of the dollar on the black market jumped to 71 pounds last month, compared to its official price of 30.85 pounds, before falling to less than 60 pounds in recent days amid expectations of an expansion of financing provided by the International Monetary Fund and reports of Emirati investments on the Mediterranean coast of Egypt.
The Egyptian Central Agency for Public Mobilization and Statistics said yesterday, Thursday, that annual consumer price inflation in cities fell to 29.8% last January, from 33.7% the previous month, which was much lower than analysts’ expectations.
gold market
According to the annual report of the World Gold Council, the demand for gold coins and bullion in Egypt increased by 57.8% between 2022 and 2023.
The price of a gram of 21-carat gold also rose by 122.7% to 3,875 pounds ($126) in the year ending January 30, according to the General Federation of Chambers of Commerce.
Reuters quotes economic expert Ihab Samra as saying that this demand is driven by “panic,” adding that “owning gold at this moment is neither an investment nor a saving, it is an escape with money to a safe haven out of the legitimate right to defend one’s money.”
For his part, Ihab Wassef, head of the Gold Division at the Federation of Egyptian Industries, believes that current gold prices are “unfair” and that buying the yellow metal during this turbulent period is “illogical.”
He also said that people’s recent rush to acquire gold is due to “trends on social media pages that say: Buy gold, gold increases.”
According to the report of the Al Jazeera Net correspondent, which was published at the end of last month, the gold markets in Egypt are witnessing a state of confusion, after the authorities arrested a number of major gold traders, under the pretext of manipulating and igniting prices, in addition to accusing them of storing bullion, and being responsible for the rise in the dollar, by the demand to buy it. To secure the gold market’s needs for imports of foreign raw materials, as well as fulfill international obligations to major merchants and their counterparts abroad.
Silver option
In the face of the rise in gold prices, many Egyptians turned to buying silver, and Reuters quotes one Egyptian woman as saying that she was forced to choose silver because buying a “small earring” of 18-karat gold that weighs less than a gram has now cost more than 3,000 pounds.
Reuters quotes Wasfi Amin, advisor to the Gold and Mining Division of the Federation of Egyptian Industries, as saying that there is an increasing demand for silver bullion and silver jewelry, despite some considering them to be “second-class.”
Hani Wassef, a well-known silver merchant in the Khan Abu Takiya area in Old Cairo, said that his customers are usually people with limited income who want to preserve the value of their money and cannot buy gold.
Abanoub, a seller in a silver shop in Cairo who requested that only his first name be used, mentioned that some newlyweds buy silver wedding nets instead of the usual gold, adding that “silver has become gold.”
The price of a gram of silver more than doubled within a year, reaching 47 pounds.
