CAIRO - Egypt is considering to lift a ban on gold exports, as the economic and political conditions are stabilising. The ban, set up by the Egyptian Government in February, has caused a market slowdown, traders say. "The ban was imposed in view of exceptional circumstances. It aimed at safeguarding Egypt's stock of the precious metal," Minister of Industry and Foreign Trade Samir el-Sayyad told local media this week. "The gold industry has shed losses estimated at $20 million monthly because of the ban," said Mohamed Hanafy, the head of the Metallurgical Chamber at the Egyptian Federation of Industries. "Traders make LE150 profit per kilogramme of gold. Now smugglers make more than LE15,000 per kilogramme, as the local price is around LE15,000 lower than world prices per kilogramme," Hanafy explained. On the local market, 24 carat gold sells for LE258 ($43.4) per gramme, while gold sovereign stands at LE1,805. Gold hit a lifetime high of around $1,447 last week due to a falling dollar, unrest in the Middle East and North Africa. World gold prices are forecast to rise even more, due to renewed concerns over a sovereign debt crisis in Europe. In India, the world's largest gold market, the high-demand wedding season is under way. Gold is seen to be on track for its 10th quarterly gain in a row since 2008. The market slump is jeopardising a centuries-old industry in the most populous Arab country of 80 million, experts say. "Gold manufacturers have taken a blow. Foreign traders now buy gold scrap and reshape it into blocks and smuggle it out of the country to make huge profits," Hanafy said, calling for ending the ban as soon as possible. There are around 5,000 gold workshops employing more than 50,000 goldsmiths in Egypt, according to the Ministry of Trade and Industry. In addition to 20,000 retailers, a total of 70,000 people make their living out of gold. "Shops may have to shut down if the situation persists. Goldsmiths and labourers may be laid off," Hanafy forecast. Unemployment in Egypt stood at nine per cent in 2010, according to the State-run Central Agency for Public Mobilisation and Statistics (CAPMAS). The workforce stood at 26 million in 2010, according to CAPMAS. But unofficial reports say that unemployment amounts to 15-20 per cent. Nearly 40 per cent of the population live on less than $2 a day, according to the World Bank. "There's an oversupply of gold here. Demand has been slowing down. This situation has led to a gap between local and world prices," said Ihab Wassef, a board member of Egypt's Federation of Chambers of Commerce. There are around 13 million unmarried people between 18 and 35 in Egypt, according to CAPMAS. "Higher prices prevent many young people from buying expensive shabka (a gold gift given by a groom to his bride according to Egyptian custom). It's not about the size of the market. It's about the purchasing power of customers," Wassef said. As a result of the low tourist numbers, gold sales have fallen since January, a jeweler said. "Tourists accounted for 30 per cent of local jewelry sales. Repercussions of the unrest have affected tourism, which consequently affected gold sales," said Adel el-Khangary.
