Selling gold to make ends meet in Greece
A smartly dressed woman waits as a young man behind a glass screen weighs her gold earrings, bracelets and rings and counts out 1,600 euros.
“I’ll see you again soon,” she says, slipping the bills into her purse. Behind her, a grey-haired man shuffles toward the counter. “Do you buy gold teeth?” he asks.
In the Greek capital, gold is marking a divide between the “haves” and a growing number of “have nots.”
Shops like this one have mushroomed in downtown Athens and are doing a brisk business. They offer cash for gold by weight and sell it to foundries.
Many ordinary Greeks who prospered after the Mediterranean country entered the euro a decade ago are now being forced to sell their family treasures just to make ends meet.
With the worst recession since the 1970s grinding into its third year, fresh belt-tightening measures to appease international lenders are driving many middle-class Greeks to desperation.
Unemployment has climbed to more than 16 percent and real wages are down by around a fifth since the global financial crisis struck three years ago.
With average salaries less than 1,300 euros ($1,900) a month and inflation running at more than 3 percent, many Greeks say they do not have enough money to pay for the basics.
“A lady came to me the other day crying because she needed to sell her gold jewels and didn’t know what they were worth,” said Alexandria Verykokaki, 55, whose family has owned a jewelry shop in downtown Athens since 1923.
“These are not poor folks. They are ordinary, middle-class Greeks: a woman with three kids who needs to sell her wedding jewelry just to send her kids to school.”
Gold rush for wealthy
That is one side of the coin. On the other, many wealthy Greeks, worried by the political paralysis gripping their country, are pulling money out of the bank and buying gold, regarded as the ultimate safe haven in times of uncertainty.
Burnishing its appeal, the price of the precious metal has climbed to record highs over the last year, driven in part by anxiety in financial markets over Greece’s prolonged agony which has prompted a flight to stable assets.
Many international investors believe the eastern Mediterranean country, which makes up just 2.5 percent of the euro zone economy, cannot hope to service its enormous debt running at nearly 350 billion euros and rising.
Many in Greece appear to agree. Banks have lost around 8 percent of their deposits this year, with outflows accelerating in May and June as anxiety grew at the government’s dwindling parliamentary support, according to credit ratings agency Moody’s.
Roughly half the fall was due to individuals and companies burning through their savings to compensate for their lower income.
But the rest was due to wealthier Greeks, fearful of an impending financial collapse should the country default, sending money abroad, stashing it in safety deposit boxes, or buying gold coins, Moody’s said.
“The people with money are no longer buying land, they are buying gold and silver,” said Verykokaki. “Greeks are ignorant. It’s stupid because if they take the money from the bank, the banks won’t have enough to go around.”
With capital flight compounded by a increasing number of loans turning bad, authorities have urged banks to explore merger possibilities to cope with the crisis.
The flow of capital from banks could become a flood if the government fails to implement the 28 billion euro austerity plan, demanded by the European Union and the International Monetary Fund as a condition for propping up its finances.
In a tight vote on Wednesday, parliament approved a law outlining tax rises, spending cuts and the sale of state companies.
But Greece’s privatization process, which stalled when the Socialists won power, may struggle to meet targets amid the political and economic maelstrom. Greece needs to sell 5 billion euros in assets by December to honor its commitments, but foreign investors may be wary faced with militant unions.
“The prime minister talks about privatization, tax reforms, social reforms. He’s talked about all that before,” said political analyst Costas Panagopoulos. “The question is will he use this vote to move forward with these crucial reforms?”
Greece’s debt is forecast to reach 1.6 times its economic output next year—bigger than Argentina’s when the South American country stumbled into a chaotic default in early 2002.
Many Greeks believe not only that it is not economically feasible, but it is not morally acceptable to pay a debt racked up by the political dynasties which have ruled the country for decades.
“I want to tear down the parliament building. We didn’t waste all this money, they did, and they are not going to jail,” said Dimitris Avramidis, 34, a bookstore employee.
“I’ve done nothing wrong. I’ve never taken out a loan in my life. So why should I pay now? I want people to take all their money out of the banks.”
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