Inflation devours the savings of Tunisians… The luster of gold fades amid the decline in buying

The habits of hoarding gold, which was one of the most important means of saving and family hedging in Tunisia, have receded amid the high cost of living and the rise in the price of the yellow metal to record levels in recent years, which caused stagnation in the goldsmiths’ markets, which relied heavily on the middle class.

Hoarding gold as a saving tool is a long-standing habit among Tunisians, as families used to hedge with the yellow metal, which is used for decoration and is resorted to in times of crisis to finance family projects such as the acquisition of residential or agricultural real estate, but the situation has changed a lot in recent years.

Hatem bin Youssef, head of the Jewelery Chamber of Commerce, told Al-Araby Al-Jadeed that gold market transactions have recently declined significantly, with a decline of more than 50% over the past ten years.

Ben Youssef confirms that major changes have occurred in the Tunisians’ relationship with the precious metal, as the habits of hedging and saving by hoarding it have disappeared despite its price rising by more than 60% during those years, as the market did not record any improvement in the trading of precious metals, while sales fell to their lowest levels in post-coronavirus period.

He adds that “the seasons of buying gold among Tunisians were closely linked to agricultural activities, as demand moves for ornamental purposes or hoarding in the summer after harvesting the grain crop, and buyers during that period are often residents of the northwestern regions, on the other hand, residents of the south buy gold after Citrus collection.

And the head of the Jewelery Chamber of Commerce continues, that gold has remained one of the most important savings tools due to its fixed value that is not affected by inflation factors that lead to the erosion of financial savings, as the price of one gram of 18 carat currently ranges between 170 and 180 dinars ($ 54.3 and $ 57.5), While it did not exceed 80 dinars ten years ago, which increases the value of jewelry hoarded by individuals.

He says that in addition to the decline in savings levels by the middle classes in light of the difficulties of life, the financially affluent refrained from buying gold in order to save also in light of the fear of being held accountable for the sources of wealth.

Tunisia faces the risks of large-scale economic inflation, which reached record levels not recorded in the country in three decades, reaching 10.2% last January, according to data recently issued by the Government Statistics Institute.

The behavior of savers in Tunisia is subject to factors closely related to consumption and the development of incomes, as well as other measures such as preventing monetary and financial crises and tremors that significantly reduce the funds allocated for savings, according to economic studies.

Savings by individuals in Tunisia represent about 10% of the gross domestic product, estimated at more than $40 billion, while official figures are absent on the size and value of savings in precious metals.

Salim Besbas, an economist and former finance minister, told Al-Araby Al-Jadeed, “Buying foreign currencies on the black market and owning real estate are among the most important safe havens for savings in Tunisia.

Besbas explains the decline in savings through the purchase of gold and precious metals by the nature of the gold trade in Tunisia and the weakness of this market compared to the real estate development market or the hard currency market, which is dominated by activists in the parallel economy.

For decades, families used gold savings to finance productive projects in the agricultural and commercial sectors and to educate their children, which contributed to increasing growth and improving the standard of living of families.

Economic expert Khaled Al-Nouri told The New Arab that the rate of inflation during the past ten years caused a decline in savings by 50%, and its continuous rise is likely to cause a decline in savings by between 1% and 2% annually in the future.

Al-Nouri adds that the loss of purchasing power directs all Tunisians’ incomes towards consumption, stressing that hedging and saving with money or precious metals is an economic and social phenomenon that allows the formation of a reserve that benefits investment, production and employment. It also allows the creation of fixed wealth and increases the amount of productive work in addition to supporting growth.

International reports on the importance of gold hedging say that historically periods of high inflation are positive for the price of gold, as investors tend to flee from paper currencies towards the yellow metal.