GOLD PRICE SLIDES ON WORLD MARKETS, REMAINS HIGH IN GEORGIA
Nino Saginadze
The Georgian Times
September 19.09.2006
Gold prices have been going down in the New York and London stock
exchanges. The price of gold slumped to record lows at $594 USD last
week. Prices are declining on silver as well. Silver costs $11 USD
on the world markets. The price plummet has been brought about by
changes in oil prices and also by low consumer spending due to the
strong dollar.
The drop in the price of gold on the world markets have not affected
prices in Georgia. The price of gold, silver and other metals remain
at the level registered in January 2006. Neither a strong GEL nor oil
prices are having an impact on the metal prices in Georgia. Georgian
stock exchange experts argue that if gold prices remain low on
the world markets it will affect the prices in Georgia in the long
run. However, they add that that may take months.
Given the fluctuating price of the USD and the unstable economic
environment in Georgia, people tend to invest in gold along with
real estate. This is why the demand for gold — and thus the price
of gold — remains high in Georgia. The price of gold in Tbilisi
gold markets are at the same level today as they were in February
when they hit record highs. Currently 1 gram 999 gold costs 40 GEL,
583 gram gold costs 28 GEL.
"We’ve learned that prices on London stock exchange went down, but
I cannot reduce the price," says Venera Avtandilashvili, a dealer
at the gold market. "I paid a high price for it and cannot afford
to discount it now. Some rings take two or three months to sell and
some even more – 6 months to a year. Therefore, I have to set a high
mark-up now to make a profit. I am standing here all day and have
to add at least a $50 USD mark-up to pay the daily charge here and
to make a profit. Why on earth should I care about world markets? I
have my own business. Therefore, what counts is how much I paid for
the ring rather than how much the ring would cost in London."
The price changes on the world markets have not benefited buyers but
did bring profits to gold traders. They are making use of the world
trend and are offering lower prices to gold sellers, saying that gold
has became cheaper in the world.
Tbilisi gold markets and exchanges sell mostly Italian, Turkish and
Russian jewelry. Whatever counter you go to, dealers will offer jewelry
pieces produced in these three countries. But in reality gold enters
Georgia from many different corners of the world where most Georgians
have never set foot: from African states, the US, Greece (jewelry
from these countries is mostly brought by Georgian immigrants) and
in great amount from neighboring Armenia. Jewelry produced by local
goldsmiths takes an important share of the market. Local jewelers use
the so called ‘junk’ (raw materials) imported from foreign countries
and produce pieces here.
Buyers are still favouring Russian gold. However, Italian and Turkish
gold is becoming increasingly popular. Their appeal lies in their
modern design and are mostly liked by youth people. After the demand
on the Italian and Turkish gold went up, its price also started going
up and today costs more than Russian gold. Transportation costs are
making the product even more expensive. 1 gram (585 sample) of Italian
and Turkish gold costs 32 GEL. Russian gold is a bit cheaper – 28
GEL. However, the sample indicated on the label of the ring does not
usually show the real concentration of gold in the piece of jewelry,
especially for jewelry produced in local goldsmith’s.
The copper concentration in the jewelry is often higher the norm and
therefore its selling price is much higher its real value.