Ahmad Abdel-Rahman
February 2, 2024

Egypt launches its first gold investment fund

Egyptian Prime Minister, Mostafa Madbouly, reviewed a report prepared by the General Authority for Financial Supervision (GAFS) on the launch of the first gold investment fund. Its establishment coincides with the introduction of new legislation regulating these funds. These are new to the Egyptian economy. The new fund meets the desires of many, who are looking for unconventional investment opportunities, to preserve the value of their money.

Madbouly stressed that investment funds in metals, including gold, came about because the government wants to provide investment and savings opportunities to the public. The aim is that this will be done in a way that contributes to hedging against the risks of price fluctuations so that the public can participate in a regulated and safe investment. He added that these funds also come within the framework of the economic reform efforts pursued by the Egyptian state in various sectors.

Madbouly said: "The launch of these funds comes within the framework of the state's trend towards empowering the private sector. The gold investment fund will only be the beginning of launching more investment funds and other financial instruments. It will also contribute to attracting more new investments and linking the Egyptian market to global markets."

Why establish a gold investment fund?

At the beginning of his report, chairman of the GAFS, Mohamed Farid Saleh, confirmed that the establishment of the first gold investment fund continues GAFS' efforts to support the Egyptian government in enhancing levels of financial and investment inclusion. It is also working to build an advanced, inclusive non-banking financial sector that stimulates economic growth.

Saleh said that establishing a fund to invest in gold represents the first tranche of several investment funds in precious metals that will be established. Their aim is to achieve appropriate returns compatible with the investment policy of various segments of society. Saleh also explained that the gold fund aims to invest directly in gold (a physical investment in bullion), taking into account tracking the gold price/index announced by the Egyptian Stock Exchange (EGX).

Saleh pointed out that subscription to the first fund specialised in investing in gold in Egypt, called (AZ-Gold), began last May. The fund is managed by a company that is specialised in fund and portfolio management. It requires a minimum of 100 purchasing certificate at a price of 100 Egyptian pounds for each certificate in the initial subscription. The investment in the fund can be redeemed in the form of gold or cash. Saleh explained that the subscription process means applying to invest in the fund during the first subscription period, in accordance with the conditions specified in the bulletin.

Saleh also explained that contracts are made to purchase investments through the relevant authorities, which number 10 companies.

He added: "In the interest of the GAFS to tighten the regulatory process on metal funds, and based on the role assigned to the Authority regarding the protection of dealers and the stability of markets, the GAFS has completed the development of the legal framework regulating metal funds as one of the funds of financial values transferred from the reality of Capital Market Law No. (95) of 1992, and the regulatory decisions issued by the GAFS Board of Directors in this regard."

There are also several advantages provided by the Gold Investment Fund, including the ability to start investing with small amounts, without a maximum limit. Moreover, this ensures dealing in certified and guaranteed gold, while saving a portion of the cost of obtaining gold, such as the cost of workmanship. There are also approved safekeeping services, which protects gold investors' property from theft or damage.These are registered with GAFS,

The steps to start investing in gold through the fund begin with first opening an account for the client with the company distributing the fund documents, then transferring the amount of money to be invested, then signing the form for investing in gold through the fund. The amount of money invested is converted into gold investment certificates, and an investor may recover the money or part of it, including any profits, at any time.

Photo: Egypt launches its first gold investment fund. (by Adobe)