CAIRO: “When paper money systems begin to crack at the seams, libertarian economist Harry Browne once said, “the run to gold could be explosive.
It seems the opposite is also true. Gold prices continued a nearly weeklong slide yesterday, falling $23.30 per ounce to $785.70, largely due to the US dollar’s recovery and a renewal of interest in that currency as an investment.
Gold reached a high of $1,032.70 per ounce in mid-March, around which time the dollar was bottoming out and oil prices were setting a parade of record highs. But as its allure as a substitute investment has waned in recent weeks, the metal has shed nearly a quarter of its value. The trend has been reflected among other precious metals, as silver has lost nearly two-fifths its value over the same period, down from $21.36 per ounce in March to $12.77 yesterday.
The World Gold Council compounded this news by announcing yesterday that demand for gold slipped by 15.5 percent to 35.9 tons in Saudi Arabia and by 10.7 percent to 26.6 tons in the United Arab Emirates during the second quarter of 2008.
But even as the metal’s popularity faded in these countries, Egypt’s interest was noticeably piqued, as demand spiked 9.8 percent by 14.6 tons. Analysts credited the rise mostly to inflation concerns, which have dampened confidence in the Egyptian pound.
The World Gold Council predicted that demand for gold in Egypt will keep rising over the next five years as tourism and the economy as a whole develop.
A gold sell-off among several European central banks in late July and early August helped fuel the metal’s tumble below $900 per ounce during that time. While central banks tend to shy away from any action that will unduly affect trading rates, they may have been spurred to in this case by budget worries, according to Julian Phillips, an analyst with the publication Gold Forecaster.
Egyptians have mined gold for longer than most nations have been populated, but it was not until the 1990s that the Australian mining firm Centamin discovered swathes of untapped gold reserves in the Eastern Desert. And while it is Dubai that is known as “the Gold City, the yellow metal has for years been one of Egypt’s most hyped growth prospects.
Since his firm’s discovery, Centamin’s founder Sami El-Raghy has been frequently quoted as saying that revenue from Egyptian gold could exceed those of tourism, petroleum and the Suez Canal combined.
