JEDDAH: Egypt announced a ban on gold exports "in light of the exceptional circumstances the country is passing through …to preserve the country's wealth until the situation stabilizes," the country's official news agency MENA reported Monday. Egypt's gold export ban is aimed at preventing former government officials and other industry leaders who acquired capital illegally from transferring it abroad, another report said. The Minister of Trade and Industry Samir Sayyad said in a statement Sunday that the ban will remain in effect from Feb. 27 to June 30, adding that it comes during a time of "exceptional circumstances" and is necessary "to preserve the wealth of the country until the current situation stabilizes." Since the start of the January 25 uprising, fears have risen that individuals suspected of corruption or wanted for investigation have been smuggling money abroad in the form of gold. Mohamed Mahsoub, secretary-general of the popular Egyptian Front for Reclaiming the People's Wealth, said early last week that the group has documents in its possession proving that certain former officials had transferred large amounts of money to foreign banks, where they had also deposited quantities of gold and platinum ingots. He also said one former Egyptian official had transferred some $620 million from Barclay's bank in England to UBS bank in Switzerland and that the Egyptian Attorney General had asked Egypt's foreign ministry to monitor foreign bank accounts belonging to ousted president Hosni Mubarak and his immediate family. Robust physical demand in January and February, resulting in gold rising nearly 6 percent in February and silver's strong industrial and investment demand leading to a 19 percent rise to new nominal 30-year highs. Political, and more importantly socioeconomic, revolutions in the Middle East and North Africa are leading to a degree of geopolitical instability and risk not seen in many years which paved the way to resort to traditional investor's haven. With all eyes on the Middle East and North Africa, there has been less focus on the continuing European sovereign debt crisis. However, the crisis continues and recent days and weeks have seen government bonds in Greece and Ireland again come under pressure. Hedge funds boosted their bullish bets on gold to the highest since December, when the precious metal was headed to a record price, as tensions in the Middle East spurred investor demand for a haven. Managed-money funds held net-long positions, or wagers on rising prices, totaling 182,739 futures and options contracts on the Comex as of Feb. 22, up 14 percent from a week earlier, US Commodity Futures Trading Commission data showed last week. Holdings rose for a third straight week and are the highest since Dec. 7, the day gold reached a record $1,432.50 an ounce. The price has rallied for five straight weeks as pro- democracy uprisings spread from the Middle East to North Africa. Gold is rebounding after a plunge in January that was the biggest in more than a year. Before then, the precious metal had rallied every year for the past decade. "Gold has found support and buyers have been coming in in the past few weeks," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "All the factors driving the price of gold higher are still there - political instability, currency volatility and inflation. People are following through with their intentions after the dip in January." Gold has climbed 5.6 percent this month, after a 6.1 percent decline in January prompted by an investor shift into equities. Prices are up 27 percent in the past year. Managed-money positions include hedge funds, commodity- trading advisers and commodity pools. Analysts and investors follow changes in speculator positions because such transactions may reflect an expectation of a shift in prices. Meanwhile, Australia kept its position as the world's second-largest producer of gold with a 17 percent increase in output of the precious metal last year, a research group said. Production rose 38 metric tons to 266 tons in 2010 from a year earlier, Sandra Close, a director of Melbourne-based Surbiton Associates Pty, said in a statement. Gold is trading near record highs as investors seek to protect their wealth against accelerating inflation and intensifying violence in the Middle East. Prices have risen for 10 straight years to reach a record $1,432.50 an ounce on Dec. 7 on the Comex in New York. Gold's role as an inflation hedge will grow as consumer prices increase worldwide, Credit Suisse AG analyst Stefan Graber said Feb. 22. China was No. 1 with reported production of 341 tons and the US would rank No. 3 with an output of about 240 tons, Close said. Australian output gained 12 percent to 70 tons in the fourth quarter, Surbiton said. Newmont Mining Corp.'s Boddington mine, southeast of Perth, was Australia's largest single producer during the quarter with 206,000 ounces. The Superpit, 550 kilometers (342 miles) east of Perth and a joint venture of Newmont and Barrick Gold Corp., remained Australia's largest producer for the year with 788,000 ounces, Surbiton said.
