During times of crisis, gold emerged as a safe haven for both individuals and investors seeking financial stability.
In 2023, Egyptians set a record by purchasing 57 tons of gold, reflecting a 10.7 percent rise over the previous year, as financially capable Egyptians have started purchasing gold jewelry from local jewelers or investing in gold-backed certificates offered by investment funds.
After the Financial Regulatory Authority (FRA) launched its first gold investment funds in May of 2023, EZ Gold, 70,150 clients subscribed. As of January, its assets amounted to EGP 743.1 million (USD 15.3 million).
In January 2024, the second fund, the Beltone Evolve Gold Investment Fund, also known as Sabayek, was launched, then Al Ahly Financial Investment Management.
Around 131,000 Egyptians invested in gold investment funds, amassing a total of EGP 925 million (USD 19.1 million) as of early September, according to the Chairman of the FRA, Mohamed Farid Saleh, a noticeable growth over nine months.
The growing interest in buying gold is a result of the Egyptian government promoting investment in gold funds as part of a broader effort to stabilize fluctuating gold prices, with the aim to offer citizens a way to achieve high returns through these funds, without the risks associated with excessive speculation in the gold market.
Additionally, the instability of the Egyptian pound, driven by escalating geopolitical tensions both globally and locally, along with anticipations of interest rate cuts by the U.S. Federal Reserve in 2024 and a worldwide scarcity of U.S. dollar reserves, has made gold an attractive investment. Investors view gold as a way to secure high returns and protect against the devaluation of the Egyptian pound in relation to foreign currencies.
How to Invest in Gold Funds
The gold investment fund allows individuals to start with small amounts and without an upper limit. The funds offer the assurance of dealing in certified, guaranteed gold, while also cutting down on additional costs, such as the craftsmanship fees typically charged by merchants. Moreover, investors are provided with secure storage options in facilities registered with the Financial Regulatory Authority, ensuring their gold assets are protected from theft or damage.
To invest in gold through the fund, investors need to follow a few steps. First, they must open an account with a company that distributes the fund’s units. Purchasing units is facilitated by 10 specialized firms, each overseeing securities trading, portfolio management, and fund administration.
An investor can purchase a minimum of 100 units, each priced at EGP 100 (USD 2.07) during the initial offering. Then they can transfer the amount they wish to invest and sign the investment form for the gold fund. Once completed, the transferred amount is converted into gold investment certificates.
Additionally, investors have the flexibility to redeem their investment in either gold or cash, with the option to withdraw all or part of their investment, along with any accrued profits, or receive gold equivalent to its value, as specified in the fund’s prospectus.
As Egypt intensifies efforts to enhance its financial and investment inclusion, aiming to stabilize markets and create a low-risk environment for investors, gold investment funds are emerging as a secure and convenient option, according to Ahmed Morshed, head of financial advisory and wealth management at Azimut Investments Egypt.
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