Source: day
Writer: Carla Samaha
Carla Samaha wrote in An-Nahar:
Recently, there has been a great interest locally and globally in the “yellow metal”, which witnessed a remarkable rise as a result of global instability, as the “ounce” exceeded two thousand US dollars, with expectations that gold will continue to achieve gains.
This sector in Lebanon is witnessing an active movement, according to the jewelers, who most of them assert that the markets are witnessing a wide demand for gold, especially the “ounce”, following a long stagnation as a result of the economic crisis that hit the country. What is the reason for this rush?
Boghos Kordian, head of the gold and jewelry industry teachers in Lebanon, stressed that the “yellow metal” is of great importance not only now, but throughout history, as it is a “safe haven” and the main element to protect the economy and keep pace with the process of financial inflation.
He added to “An-Nahar” that the global economic situation is pressuring towards an increase in the price of gold, as people flocked as a result of the Ukrainian-Russian war and fear of regional wars and the instability of the global economy following the bankruptcy of a number of banks, which activates the stock exchange and raises the demand for gold, and then prices rise to reach to what it is today.
The Lebanese exchange “cash” for gold
On the local level, Kordian considered that the Lebanese purchase of gold came as a result of the deterioration of the economic situation, so many, especially the “financed” individual, replaced the paper currency with the more secure “yellow currency”, and whoever has “cash” in his home proceeded to “reduce” Part of it and exchange it for an ounce. As for those who managed to smuggle their money out of the banks, they protected themselves by buying gold.
He pointed out that the continued rise of gold is linked to two factors: supply and demand on the one hand, and global stability on the other hand, indicating that gold today is greatly affected by the speed of the spread of news, while the “ounce” before and following the First World War, that is, around 32 years, stabilized at The price of 18 US dollars is due to the absence of the speed of the news.
Reserve Bank of Lebanon
And with talk of prejudice to the Central Reserve of gold, which is a quantity of gold bullion held by the Central Bank, Kordian went back to 1996, and gave an example of what was going on at the time by proposing a number of deputies to sell the stock to get out of the crisis, so the “ounce” was then 250 dollars, while today it has reached more than two thousand.
And he considered that selling the reserve means that we are “in the air,” and he suggested at that time to rent a part of it to local industries that need financing, so they resort to this offer to borrow gold instead of money, but with “protection and mortgage” in order for the treasury to maintain its condition, and the gold is bought back with debt interest to increase Inventory.
Cordian expected that banknotes would be replaced by digital currencies in the future, while gold would remain the only guarantee.
No confidence in digital currencies
From an economic point of view, economist and financial expert Eli Yachoui considered that digital currencies have proven instability because they are “unknown”, and the investor cannot trust them, so he had to return to the fiat currency.
He added to “An-Nahar” that the paper currency was affected by many factors, including wars, instability, natural disasters, and others, which prompted people to resort to a safe haven, which is naturally gold that maintains its value.
He pointed out that the individual no longer cares regarding the value of interest because it is eroded by inflation, and only thinks regarding how to preserve capital, especially with the expectation of a 3 percent decline in global growth in 2023.
“The more conflicts increase, the more people aspire to gold,” Joshua affirmed.
Who buys gold?
Regarding the segment that buys gold, the owner of one of the gold stores in Zahle – Bekaa confirmed that the Lebanese who resort to converting his savings into gold are the owners of interests who earn money, such as the owners of bakeries, pharmacies and the fuel sector, in addition to merchants and those who receive money from abroad, such as the Syrian who depends a lot on Converting his money into gold, not only now, but decades ago.
He assured Al-Nahar that the gold market sometimes witnesses a shortage of bullion, ounces, and pounds whenever their price rises, due to their monopoly by the big merchants in Beirut, while the demand for buying preoccupied gold has declined remarkably.
And he considered that the price of gold today is low compared to its future price, indicating that the exchange rate of the dollar today is not what it was in 1990, when it became worth “10 cents” compared to the nineties.
Investing in gold and achieving returns
And according to a report by the American “Forbes” magazine, gold prices witnessed a remarkable global rise in March 2023, following the US Central Bank announced an interest rate hike for the ninth time in a row.
Analysts expected gold to continue this performance, and even outperform other asset classes in 2023 in light of the ongoing inflation problems, while gold prices are expected to rise in the medium and long term to a range between 2040 and 2080 dollars an ounce.
According to the report, other analysts saw that gold prices will decline, and that the risk ratio is not favorable for gold at the present time, and they also believe that this rise was supported by two short-term events, namely the collapse of the Silicon Valley Bank, and the unexpected sale of “Credit Suisse” to a bank. “UPS”.
In short, it is difficult to predict whether investors should buy gold now to achieve returns, but the purchase of this “yellow metal” to protect the evaporation of money due to inflation may not cause any harm to the individual or to the personal interest.
