|  Nairobi Business Monthly   May

security concerns.

“Today most of the jewellery in Kenya comes

ready made from Dubai,” said Mr B Shah, a

local dealer with over 30 years of experience

in precious metals and stones. He remembers

a time, shortly after independence, when street

vendors would manufacture gold chains on

Biashara Street, and over 50 jeweller shops

lined River Road in downtown Nairobi. Rising

insecurity however put an end to the trade and

today the sole jeweller shop on River Road is

Nagin Pattni.

Money &Markets

Ethiopia howeverstands out in the

East African region asa country where gold istraded in street kiosks.

 West Africa too is hometo a bustling trade in gold

 jewellery.

During the colonial days, gold biscuits were

legally traded in Kenya through over the counter

purchases at local banks, said Mr Shah.

Today, some Kenyans continue to invest in

biscuits that are purchased from gold havens

like Dubai, but they are not legally traded here as

they are elsewhere in the world. In Switzerland,

for instance, a square of a gold biscuit (akin to

a Cadbury’s bar) is broken o  and can be given

out in lieu of a payment.

Ethiopia however stands out in the East Afri-

can region as a country where gold is traded

in street kiosks. West Africa too is home to a

bustling trade in gold jewellery.

Despite the recent fluctuations in the inter-

national price of gold, the New York Times

reports that anyone who bought gold in 1999 and

held onto it has still performed better than the

average stock market investor because it is not

subject to the same market driven fluctuations.

And even after the recent decline, the price

of gold is still up 515%. Unlike other financial

assets, however, gold does not produce a stream

of income either as rent or dividends.

BY AKINYI JOSEPH

 A 15% drop in the price of an asset over a 2

week period is one that would leave any

investor economy trembling. But the drop

in the international price of gold from Sh 4,800

per gram to Sh 4,200 per gram (as at 23rd April)

has had little e ect on the Kenyan economy.

It has hit countries like China, South Africa,

India, Australia, the Congo and a city like Dubai

renowned for its gold exchange the hardest

since they either produce gold or use it in local

manufacturing. Kenya has been prospecting

for gold at its Migori, Kuria West and Nyatike

mines in South Nyanza since 2009, but is not

yet a producer.

China and India are acknowledged to be

some of the higher consumers of the precious

metal. While China uses a substantial amount

of adulterated gold in the components of its

electronics sector - valued because it is a poor

conductor - India consumes large quantities

in its marriage trade.

A poor family in India uses at least ten tolas

(120 grams) in each marriage while there is no

limit to the amount used in the more extravagant

wedding ceremonies.

In the United States, gold is consider to be

a stable investment in a time of international

recession, and is preferred to instruments like

real estate and mutual funds since it is insulated

from inflationary pressures.

The ordinary American investor plows an

unknown amount into government minted

coins, publicly traded commodity funds, mining

company stocks and physical bullion. With the

recent drop in price of gold, the vault of the

Federal Reserve Bank of New York, the world’s

largest trove of gold, experienced a $75 billion

loss in value.

In Kenya, the precious metal is not traded

legally and few people wear gold because of

The golden allure for investors

INSTRUMENTS

Countries that rely on theprecious metal count their lossesas the price of gold plummets