Bulgaria seized by gold rush

published on 8/25/11 12:58 PM

Bulgarians have also been in a rush to join the global “gold rush”, starting to purchase or sell gold jewels on a mass scale.

Photo: BGNES

It was precisely 115 years ago in the month of August that the famous gold rush in Klondike started. Symbolically or not, it has been again the month of August that brought a new gold frenzy that has spread worldwide. The record price of 2,000 USD per troy ounce seems to be perfectly achievable. Is it possible that inflation is eating away the savings of people or the mistrust of world financial markets will take us back to the time when gold was used as monetary means of payment and as a security for paper banknotes?

Bulgarians have also been in a rush to join the global “gold rush”, starting to purchase or sell gold jewels on a mass scale. It turns out, however, that those who sell are more than those who wish to invest in the noble metal. Seized by a desire for rapid profit, many Bulgarians offer their family jewels, trinkets and coins to gold shops. The craze has even gone to such lengths that one could see queues in front of jewelry shops over the past days. More from Marina Koeva, merchant in a jewelry shop in central Sofia:

“We offer mostly gold bracelets, necklaces, rings and dental gold that is purer in content. We are unable to purchase all that citizens offer us. We don’t have so much money. What is more, this is a commercial risk for us. We have been buried under kilograms of gold but what guarantee could we have that this boom will not be short-lived? If this happens, we will not be able to resell the jewels we bought and we will be forced to close the shop. It is really a huge risk. We do not purchase old gold coins for example because they have more of a numismatic value and can hardly be sold. We purchase mainly new gold jewels that we can easily sell due to the high demand on the part of customers. As far as the soaring price of gold is concerned, it depends on the price of gold on the global market. We are only merchants and we respond to the laws of demand.”

The purchase price of processed gold of 14 to 18 carats is some 45 to 50 leva per gram. At the same time, it is sold to customers at double prices. The market is also abreast with the gold craze. Financial institutions, false merchants, and black market speculators have rapidly reacted to this lucrative business. Some gold shops have already been too stuffed with the jewels people want to sell and refuse to buy them any more. The market niche has immediately been taken by pawnshops that are not so much concerned about the quantity, quality and origin of the gold, only in its price. Experts from the sector, however, warn that this type of trade hides certain risks of fraud with the grams via false electronic scales. Foreign currency exchange shops have also turned into traders of the glossy metal. And not to mention the swift reaction of the black market that offers people in need “bargains” on the spot, without VAT and similar complications. The shining of the gold has attracted even scrap companies into the gold trade. Out-of-use computer boards and processors that contain some 1 to 2 grams of gold have turned into a highly-sought item. Merchants in jewelry shops say that foreigners purchase gold jewels in Bulgaria on a mass scale because of their lower price here. So the tourist season this year has been not only a pleasurable but also a useful time for some. The combination of a seaside vacation with a profitable deal with gold attracts many Jews, Arabs, and Russians into gold shops. And we all know how Russian tourists love to do shopping – with large bags and in bulk.

Experts in the sector, however, warn that the gold rush has made possible some money laundering mechanisms. New companies spring up with the aim of purchasing gold and then exporting it outside the country. It is melted, turned into gold bars and is then offered on the international gold exchanges and investors.

The demand for gold has also become one of the most fashionable hobbies in Bulgaria. According to geologists at the Bulgarian Academy of Sciences, 80 per cent of Bulgarian rivers contain gold. Attracted by these deposits, many prospectors have chosen the riverside to coastal resorts. Armed with picks, shovels and sieves, they spend hours, sifting the river sand in the hope of discovering a gold vein. And gold miners don’t even have to travel across the country, quite a few lucky men have found their desired piece of gold in rivers near Sofia.

English version: Rossitsa Petcova

По публикацията работи: Tanya Harizanova

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Bulgaria seized by gold rush

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