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'Silver is the new gold' as Egyptians try to protect savings

Published 02/08/2024, 05:08 AM
Updated 02/08/2024, 01:32 PM
© Reuters. A boy looks at silver accessories on display at a jewellery shop in a market in Cairo, Egypt, January 21, 2018. REUTERS/Mohamed Abd El Ghany/File Photo

By Sarah El Safty and Farah Saafan

CAIRO (Reuters) - Egyptian women traditionally receive a gold jewellery set, or "shabka", on their engagement. But as surging prices and a weakening currency have driven up demand for the precious metal, some are getting silver instead.

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

"Silver is the new gold," said a salesman at a Cairo silver store who only gave his first name, Abanob.

In the year to Jan. 30, the price of a gram of 21 carat gold rose more than 120% 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% 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 anymore so I bought a silver necklace for around 1,900," she said.

"It's not the same, I know, but it still has value."

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, before dipping below 60 pounds in recent days amid hopes of more IMF financing and Emirati investment.

And in a country where some 60% 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.

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.

© Reuters. A silver vendor waits inside his silver shop, as gold prices recorded an increase after a devaluation of the local currency, in Cairo, Egypt February 7, 2024. REUTERS/Amr Abdallah Dalsh

"My money would get me only 10 grams of gold," he said.

($1 = 30.8500 Egyptian pounds)

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