The decision by Aram Shishmanian, CEO of the WGC, follows his recent trip to Saudi Arabia.
“During his latest visit, Shishmanian met both government officials and some of the gold industry’s leading figures and discussed the continuing prominence of gold within the Saudi economy and explored initiatives and partnerships to enhance the Kingdom’s gold sector,” said Mohammad Azzouz, general manager of Azzouz House for Gold and Jeweler and member of the National Committee for Precious Metals and Stones. He claimed that the council suspended its activities in the Kingdom because of the huge losses in the Saudi gold market.
“We cannot deny that most Saudi citizens have become unable to buy gold as they were doing 10 years ago.”
Weak purchasing power is a general status of most Arab citizens, Azzouz claimed.
“Recent high increases in the gold prices made it difficult for many Saudis and Arabs to own gold and jewelry. In addition, political changes in the Middle East also contributed to weaken the purchasing power,” he said.
Azzouz, citing recent studies and reports, said youth made up 60 percent of the Saudi population and they were opting for other products over jewelry.
The Saudi gold market was cooperating with the council to improve the gold industry in the country, said Azzouz.
“They presented, for example, development ideas to design modern jewelry items that attract youth. However, most Saudi traders were keen on protecting the status quo without developing it to suit modern trends,” he said.
The continuing production of traditional gold designs also discouraged youngsters from buying gold, he added.
Saudization is another factor that prevented improvement in the Saudi gold industry, said Azzouz.
“Saudization of the gold sector also weakened the sales of gold,” he added.
He said most traders were busy hiring Saudi nationals who were fresh in the field. As a result, he said the development of the market stagnated over the past 10 years, leading to what he termed as “uncreative products”.
Azzouz confirmed that the large number of gold exhibitions, held annually in the Kingdom, also had a negative impact on the local gold market.
Fifty percent of the gold market needs are now served by foreign companies that took part in international gold and jewelry exhibitions, he said.
He alleged that such exhibitions offered low-cost sections for foreign traders in addition to easing many procedures. These incentives encouraged many foreign gold companies to compete with local traders, he alleged.
Azzouz also expected a low demand for gold during this year’s Haj season, as “political changes have weakened the financial status of many Arab countries”.
Ahmad Al-Sharif, CEO of Al-Sharif Company for Gold and Jewelry, confirmed that the Saudi market was weak, but that “it is part of a global trend.”
Al-Sharif, a member of the gold and jewelry committee at Jeddah Chamber of Commerce and Industry, said the gold price crisis had affected all countries including China and India.
Al-Sharif said although the purchasing power of Saudi nationals had declined many traders and families still saw gold as a safe haven investment.
He also said the Kingdom still needed a large quantity of gold for investment schemes.
“The council should not compare the Kingdom with countries such as China and India, who have a totally different population,” said Al-Sharif.
He said the WGC’s role is to promote the gold industry in Saudi Arabia, present development plans, arrange meetings between Saudi traders and international experts, and sponsor the “Jeddah Gate of Gold” and many other festivals.
“This role, however, is not so important, and we can work alone to cover this gap,” he said.
