CAIRO: While many may believe that investing in gold is a smart move, gold traders in Egypt beg to differ.
“Who said that purchasing gold is an investment? That is not true. The price of gold fluctuates; no one can guarantee that gold can be sold for the amount you purchased it for. There is always going to be a loss, Ahmed El-Mawardy, owner of El-Mawardy gold stores and member of the Traders of Jewelry and Gems Division, told Daily News Egypt.
However, according to a statement from the World Gold Council (WGO), the dollar has been weakening while gold continues to surge. “Investment banks have raised their gold forecasts on expectations that a weaker dollar and inflation will lure investors to buy the metal as a hedge, the statement said.
“Gold is a better hedge against the dollar than other commodities, says the WGO. Retailers are benefiting from this fact and consumers are capitalizing on the opportunity to buy a durable commodity.
Egyptian gold traders think otherwise, however, saying that gold is more of a luxury than an investment.
“Nothing can guarantee the stability of gold prices, as they are linked to the international market, Ali El-Sirgany, a jeweler, told Daily News Egypt. “Unless people sell the gold when its price increases, then the increase in terms of the gold’s worth will compensate for the loss in craftsmanship.
Currently, the price of a gram of 21-carat gold stands at LE 107 and 18-carat gold at LE 90-LE 92. When craftsmanship and the trader’s profit are added to this price, it increases by 10-20 percent.
“Gold is an asset and bears no credit risk and it is durable. Gold’s most important advantage was, of course, its legacy as a monetary commodity, the WGO’s statement said.
On the other hand, El-Mawardy said, “If anyone sells the gold they bought, they will lose at least 70 percent of what it is worth.
Consumer tastes in gold in Egypt have changed and demand for 21-carat gold, regarded the most valuable, has decreased. “No one buys 21-carat gold anymore, except those who live in governorates; 18-carat gold is what all the youth and the middle-class purchase now, El-Sirgany said.
An ounce of gold costs nearly $680, a figure that has increased by 50 percent in the past two years.
The WGO noted a relative surge in jewelry transactions, saying that “after an initial dip in buying gold, customers are once more packing shops to buy gold jewelry.
“It is true that recently people are buying more gold, but it is because this is the marriage season, El-Sirgany said. Also, Arabs tourists cause a price surge as many of them buy their shabka (traditionally the groom’s present to the bride) while visiting Egypt in the summer.