The head of the General Division for Gold and Jewelry at the Federation of Egyptian Chambers of Commerce Hani Milad announced on Tuesday that the collapse of Silicon Valley Bank in the US will affect gold prices in Egypt.
During a telephone interview with the CBC satellite channel, Milad said that the rise in the price of an ounce of gold to $1,900 is related to the Silicon Valley Bank crisis.
He added that the bankruptcy of Silicon Valley Bank is an indicator of a major economic crisis similar to the 2008 crisis and the wavering of confidence in the US banking system.
In response, the world price of gold soared. The price of an ounce reached US$1,912 as gold is a safe haven, especially in such volatile conditions, Milad said.
He added that the rise in the world price of gold will naturally raise the price in Egypt.
Background provided by CNN explains that the “SVB ran into trouble when it sold US Treasuries at a loss to raise money to cover deposit withdrawals. Like many banks, it bought bonds in recent years when interest rates were very low. Now that interest rates have shot up, those bonds are worth less. According to the Federal Deposit Insurance Corporation, such unrealized losses total $620 billion in U.S. banks.”
“The US and UK governments worked all weekend to prevent Friday’s dramatic events collapse of Silicon Valley Bank — the second largest in U.S. history — of causing another banking crisis.”
“In an extraordinary move to restore confidence in the banking system, the Biden administration said on Sunday that all deposits at SVB would be guaranteed. The government also closed signature bank and said its depositors would be protected by a similar deal.