CAIRO: Gold’s ornamental value has taken a back seat to its value as a commodity with demand for the precious metal making a comeback amid volatile global currencies and rising oil prices.
The price of gold has skyrocketed reaching LE 152 per gram and, according to gold dealers, its value is bound to rise to LE 300 if the state of the economy remains unchanged.
The market is now only open to experts and speculators, rather than average shoppers with moderate incomes.
The scene at Khan El Khalili’s gold market has changed drastically, and people who don’t frequent the market on a regular basis will be surprised to find that a number of vendors no longer have gold accessories displayed in their shop windows.
“Do you want to buy gold coins? asked Hamdy as he sat in front of his small shop, displaying an empty showcase. “Last month a man bought gold pounds and managed to make some LE 3,000 pounds in cash in less than three weeks, he said.
A shop that specializes in buying pure gold turned down an offer by two women who came in hoping to sell their jewelry. “We only accept items from trustworthy gold dealers. We don’t make individual bargains, said the vendor.
“But you have to be very careful with gold brokers, warned Hashem Badr, another gold outlet owner. “They help you make deals for a certain commission. Why should you resort to that if each and every shop here is ready to buy your stuff?
The situation can prove detrimental for gold traders who failed to react when the value of an ounce jumped this week to $1,000.
A few years ago, saving gold as a cash-generating commodity was thought to be old-fashioned, especially amid the consistent drop in gold prices at the time.
Things changed after the 2003 Iraq invasion and the Iranian nuclear crisis. Gold dealers said prices went from LE 28 per gram in 2003 to LE 152 in 2008.
“This is the first time gold merchants are disappointed by rising gold prices, said Mohamed Attia, an assistant at a gold outlet. “No one is coming to buy jewelry. As you may have noticed, for over a year a lot of shops have been turning to a certain dealer who only deals in pure gold rather than jewelry.
“This trend is affecting the traditions usually associated with gold (most of which have to do with marriage). Currently, couples can only afford to buy two rings and a necklace when a few years ago the average couple purchased gold accessories worth LE 15,000, Attia explained.
“Now the groom offers his bride an equal amount of money or any other item. This is simply because he won’t be able to buy that much (gold) for a few thousand pounds. Even those who used to give a newborn baby the gift of a necklace or earrings are opting for different gifts.
Others are resorting to silver because it is relatively more affordable than gold. However, silver dealers say they are not benefiting from the changes in the gold market. “Yes, some buy one gold item and three silver items, said Nasif Naguib, a silver dealer.”But for the majority gold is irreplaceable, so our business isn’t really booming at the expense of gold shops.
“Not all gold dealers accept the idea of switching to pure gold outlets although, ultimately, this is the only option when people stop visiting gold markets, said Mohamed Abdel Baset, another gold vendor. “Only the well-to-do can venture into this kind of business but the average people can easily do without gold, he added.
“Why are you surprised? asked Naguib. “The prices of all essentials have gone up: steel, flour, rice, etc. But gold is the only thing that will survive, and everyone is saving it to secure themselves against the affects if the war over oil, he said, as well as the domino affect of ailing economies.
