-- Posted Tuesday, 16 August 2011 | | Disqus

A five-ounce bullion coin featuring the President of the UAE, His Highness Sheikh Khalifa bin Zayed Al Nahyan has been unveiled by the Dubai Multi Commodities Centre as the importance of gold to the future of the emirates as a trading hub is recognized and much higher prices seem imminent.

The DMCC is hoping its weighty coin will appeal to serious investors at AED30,000 a piece. Its earlier smaller coins baring the face of Dubai Ruler and UAE Prime Minister, Sheikh Mohammed bin Rashid Al Maktoum were not a great success.

Gold coin demand

However, gold and silver coins are increasingly popular around the world among investors. The premium over the spot metal price is usually higher than bullion bars for storage in bank vaults. But coins are easy to transport and trade as a certified money with no central bank to devalue them.

Ironically though the DMCC is now in talks with the UAE Central Bank to get the new ‘Khalifa’ bullion designated as the first gold bullion legal tender in the Middle East. This would give the coins the status of the British sovereign or South African kruggerand gold coins.

Gold was the UAE’s biggest traded commodity after oil in the first half of 2011, and accounted for the lion’s share of a big jump in Dubai trade. Dubai has long been known as ‘The City of Gold’, particularly serving the insatiable demand for gold from India where traditional weddings require a bidal dowry of gold.

The demand for precious metals has surged in August, driving the price over $1,800 an ounce for the first time. Gold sales ran at seven times average annual demand levels in the first few days of the month, and then the price corrected as we saw in the silver market in April.

Parabolic spike?

That is the normal pattern for a rising market, with surges and corrections. However, senior market analysts like Jim Sinclair hold that gold is now about to enter a period of parabolic price rises once its price holds above $1,754 (click here).

Indeed, from a technical perspective the gold price left its 200-day moving average behind at $1,500 and can be considered to already be in the early stages of a spectacular price spike. Silver may still outperform gold (click here).

That could take gold way past the $5,000 an ounce mark that looked fantastic when the editor of this website wrote his book ‘Dubai Sabbatical: The Road to $5,000 Gold’ three years ago, though silver could well still do even better as this website has argued many times (click here).

-- Posted Tuesday, 16 August 2011 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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