The Egyptians follow the tradition of saving in gold in the face of uncertainty

Like many other citizens of various countries, Egyptians have appreciated the value of gold and its value as an element of heritage protection for centuries. For this reason, given the uncertainty that its economy is experiencing, many citizens of this country are choosing to invest in the precious metal, to combat the devaluation of their currency and maintain purchasing power.

According to the daily Al-Monitor, many Egyptians see investing in gold as the best option to protect their savings, especially in times of economic uncertainty.

A recent report from the World Gold Council reveals that spending on gold jewelry grew by 60% during the first nine months of 2021, compared to the same period last year.

2% of global spending on gold was borne by Egypt. Its citizens spent about 19.2 billion Egyptian pounds ($1.22 billion) to buy 21.1 tons of gold during 2021, compared with 12 billion pounds ($763.1 million) on 13.8 tons in 2020. .

This increase is due to the growth in demand for gold as a safe haven asset, caused by the lowering of interest rates by the Central Bank of Egypt, to 8.25% for savings and 9.25% for deposits. loans, and by the stable exchange rate for the Egyptian pound against the dollar.

As explained by Al-Monitor, there is an inverse relationship between gold and confidence in the economy: the more it prospers, the lower the price of the metal. According to Rafiq Abbasi, director of the gold division of the Federation of Egyptian Industries, "in the short term, the increase in infections caused by the omicron variant and the confinement decreed in several countries, the world economy will experience a new regression , which will lead to a rise in the price of the metal. Now is the time to buy gold, before it rises in price.

According to Abbasi, gold is a better investment option than others for both individuals and banks or companies, which seek to preserve the value of their assets in the event of an economic recession. In the case of citizens, they have always shown interest in gold, due to the lack of a public health system and unemployment support, and fear of future price increases.

The expert explains that “those who buy gold to increase their savings usually buy it in the form of jewelry, since it is not subject to taxes and is cheaper than other products. When the price goes up, they sell the jewelry.”

In the opinion of Yemen al-Hamaki, an economics professor at Ain Shams University, the interest of the country's citizens in gold is fully justified and is due "to the fall in interest rates of Egyptian banks and to the constant uncertainty that citizens experience”, a pattern that “has been repeated in the last 20 years as a result of the financial crises”.

Hamaki warns that the appearance of the omicron variant of the coronavirus will have a negative impact on the economy, which will be reflected in the cut in supply chains and in the rise in prices, both locally as global. “Those with a monetary surplus will continue to buy gold, even more so given the current low price, and inflation will continue to grow,” he concludes.