CAIRO: The term "gold standard refers not to the best standard, but to that which is impervious to change, coming from political struggles that occurred when countries first decided to un-peg their currencies from the actual value of their gold reserves. Although the world's total wealth no longer reflects the world's total amount of gold, confidence in the "gold standard remains strong. When the real estate bubble popped in the United States and Europe and funds once considered secure evaporated into thin air, investors rushed to buy gold, seeing it as one of the only truly secure investment. Global gold prices have remained strong all over the world despite signs of economic recovery. The past weeks have seen record-breaking highs as various global factors combine to create a "perfect storm of gold prices. In the first week of December prices broke through the $1,200 per ounce ceiling for the first time ever. Fears of inflation and efforts to diversify assets away from a weak dollar were cited by Arab Finance as two contributing factors. Dollar-dominated gold is an especially appealing investment for stronger non-dollar currencies, whose interest continues to keep prices high. In addition, central banks have been purchasing the precious metal, reaffirming its desirability to private investors and driving prices higher. The Central Bank of Sri Lanka purchased 10 tons of gold from the International Monetary Fund (IMF) at $375 million as the country seeks to restructure its financial resources. Rumors abound that India is also planning to buy additional gold from IMF. The giant Canadian mining company Barrick Gold gave out the news that it had eliminated all of its hedges on the world's largest gold production and reserves. All over the world, hopes are high to benefit from sky-high gold prices. In Egypt, prices are at similar record highs. Although this is good news for private gold owners who decide to liquidate their gold into cash, Cairo's jewelers are suffering. Ahmed El Sirgany, a jeweler with Aly El Sirgany Jewelry, laments the perpetually high prices. "All my transactions are buying from private gold owners who are benefitting from the high prices. No one wants to purchase gold right now with prices so high. El Sirgany explains that the past weeks have seen remarkably low numbers of gold buying, as usually Eid brings out engaged couples looking for wedding jewelry, the shabka. "The price is currently LE 180 per gram, he states. "Even the cheapest pieces are just too expensive for people to consider. With 28.3 grams to the ounce, one ounce of gold is LE 5,094, or US 943. "The gold price in Egypt is set at slightly lower than the global standard, so that when we buy and re-sell we can make at least a minimal profit and survive. However, if prices remain this high, many jewelers will be forced to close. He warns potential sellers hoping to cash in that gold remains the most stable back-up, and that selling all one's gold this year may lead to regrets next year. Asked whether record process would lead to market glut that would drive prices back down, he replied that Egypt's gold prices can only reflect the global market, where sellers are rife. He explained feeling helpless. Jewelers like El Sirgany have relatively little insights to the market forces that dictate their daily transactions, and even if they know the reasons behind high prices, they are powerless to affect them. "In the market I hear rumors but no facts. People are saying that India is buying gold and that keeps prices high, he sighed. The gold market can fluctuate wildly as well. On Friday, El Sirgany explained that a major drop per ounce in US market, from $1,220 per ounce to $1,170 on same day represents a challenge for markets like Egypt that just have to hang on. "We can't handle this price drop so we use this as average, he said. Asked who regulates the price of Egyptian gold, he said, "Customers buy and sell from jewlers, who buy and sell from gold sellers, who deal in 'rough gold'. When I sell to them, for example, I cast the gold as a bar of a half kilo, for instance. El Sirgany's predicament gives insight to the greater financial market, where profits are based on transaction rather than actual wealth at any given time. "Yes, currently I have a high value of gold. Technically this is higher wealth, But for me, it depends on selling the gold. It has little use to me unless someone purchases it. And I have never seen it this slow.
