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Egypt: 'Silver is the new gold' as citizens try to protect savings

February 8, 2024 at 12:42 pm

Pedestrians stop to browse the window of a jewelry store in the Al-Khalifa district of Cairo, Egypt, on Saturday, on January 7, 2023 [Islam Safwat/Bloomberg via Getty Images]

Egyptian women traditionally receive a gold jewellery set, or “shabka”, on their engagement. However, reports Reuters, as surging prices and a weakening currency have driven up demand for the precious metal, some are getting silver instead. According to one salesman in a Cairo store, “Silver is the new gold.”

The trend is a measure of an economic crisis in which inflation has been running at more than 30 per cent and the Central Bank has allowed the currency to weaken 50 per cent against the dollar, with more devaluation expected.

In the year to 30 January, the price of a gram of 21 carat gold rose more than 120 per cent, to 3,875 Egyptian pounds ($126), data from the Federation of Egyptian Chambers of Commerce showed. Demand for gold coins and bars surged nearly 58 per cent from 2022 to 2023, according to the World Gold Council’s annual report.

Eman Mahmoud, a 51-year-old mother of three, said she had to opt for silver when buying jewellery for a friend’s new baby. “A small 18-carat earring weighing less than a gram is more than 3,000 pounds. I can’t afford that as a gift any more, so I bought a silver necklace for around 1,900,” she explained. “It’s not the same, I know, but it still has value.”

Indeed, the price of one gram of silver more than doubled in a year, but at about 47 Egyptian pounds it remains far cheaper than gold. Ramy Zahran, an 18-year-old high school student who wants to work in the silver business like his uncle, bought silver bullion for 31 pounds per gram little over half a year ago. “My money would get me only 10 grams of gold,” he pointed out.

Those who can have sought safety in foreign currency or property, but the black market rate to buy dollars jumped as high as 71 Egyptian pounds last month, against an official rate of 30.85. It has dipped below 60 pounds in recent days amid hopes of more International Monetary Fund financing and UAE investment.

In a country where some 60 per cent of the 105 million population is estimated to be below or close to the poverty line, few can afford to invest in high-end property where sales have been booming.

READ: Dollar madness sweeps Egypt