Egypt's currency crisis sparks surge in gold buying through apps, ATMs

Gold ATMs are soon to be popularized in shopping malls as a sign of financial inclusion and financial deepening in terms of having new financial assets in the market which is largely dominated by the US Dollar already in a severe liquidity crunch.

Cairo has been witnessing several developments throughout the last months that would lead to easy access to the gold market and diversifying its investors in a bid to reduce reliability on the USD and divert interest to other saving assets.

Egypt has devalued its local currency against the USD three times since March 2022 and the current gold market revamp came when a fourth devaluation was expected in the weeks after the presidential race that ended in December 2023 after failure to contain the currency parallel market activity.

"When there is a need, there is a market," said economic expert Sherif el-Demerdash, "And there is a need to find a haven for personal savings among the people amidst the decreasing purchasing power and the decreasing value of the Egyptian Pound".

He added that fear from currency exchange rates is global and it's leading the world to head to gold investments considered a "wealth store" in light of troubled international markets.

For all of this, creating tools that would facilitate access to the gold market makes sense to El-Demerdash.

In December, an agreement between the gold manufacturer Dahab Masr and GuROW, an AI-compelled investment advisory mobile app was announced to leverage modern technologies empowering a financial community with premium knowledge and facilitating investing in gold. GuROW was founded by Arab Finance, Egypt’s oldest stock-market information portal and is defined as "Personal cash management advisor".

Earlier, Dahab Masr partnered with Kash Now, an Egypt-based digital payment app to offer online gold purchasing that will be home-delivered. Ex-gold merchant Ahmed Said believes it is better to purchase gold online through such mobile apps than in jewellery stores given their real-time prices that reflect market fluctuations.

In November, Gold ATMs were introduced in Egypt, after India and UAE, through gold manufacturer Master Gold Egypt in partnership with local fintech company Finway. Described as "Sign Of The Times" by the Enterprise daily newsletter, the machines were displayed at a gold expo before they were distributed in shopping malls with tightened security measures around them.  

Such innovative gold purchases require personal IDs contrary to purchasing invoices from gold shops where merchants can manoeuvre their real profit to evade taxes. Some gold buyers are sceptical to give their IDs fearing a state that acts as "Big Brother" watching who owns what and has the process under control. However, some experts just see it as a means to collect more taxes and develop the state's financial resources. 

According to Said, the keyword in the ID requirement is taxation. "Selling gold online means sellers issuing e-invoices. It is becoming organized so the state can increase its taxes collected," he explained.

Gold is a quick trading asset, Said concluded, adding that once a buyer purchases a gold bar or coin online, he can sell it the next day without an invoice, so tracking is not possible. 

Egypt's Assay and Weights Administration (AWA) held its first electronic auction for gold and silver to "generate more revenue streams for Egypt's treasury," according to the Supply Minister's advisor for gold industry affairs. 

In May, Egypt's first gold investment fund was launched by asset manager Azimut and investment company Evolve Holding. The fund issues investment certificates starting from EGP 10 (USD 0.32) that will be sold at post offices and can be redeemed in cash or gold.

Egypt has been exempting gold imports brought in by Egyptians abroad from customs as per the zero-custom initiative launched in May for an initial six months and later renewed for another six months.

Citing "the positive return in trying to control markets and restore stability and balance to prices," the initiative brought in around three tonnes of gold, according to Egypt Customs Authority.