Jewelry shops in Dubai are stocking up again on gold and silver bars and coins after a 30-40 per cent year on surge in sales, with the traditional dowry of gold jewelry now making way for newly minted 1-kilo silver bars and the ten-tola gold bar, an old fashioned Indian measure equal to 3.75 ounces.
Indeed in August when the price of gold soared to a new record high of $1,923 the jewelry business dipped and the demand for bullion really took off. The price fall back to $1.530 caught these late speculators by surprise and many compounded their error by immediately selling their bullion back to the shops.
Ten-tolas
World Gold Council statistics show that demand for bullion and coins was up six per cent in the second quarter of the year in the UAE where Dubai is located and demand for jewelry fell by one per cent.
Traders have responded by ordering more bullions and coins. Emirates NBD Bank also reports high demand for its gold certificates. But the culture is really in favor of the physical metals, with silver just as popular as gold these days and stocks running low (click here).
Dubai is known as The City of Gold, a throw back to a romantic past of gold smuggling when the taxes on gold were very high in India. Gold could be perfectly legally bought in Dubai tax-free, as it still is and then exported through clandestine operations to the subcontinent at large profits. It was an early source of the wealth that built the city from a desert creek village to a modern trading hub.
DGCX volumes high
These days the big guys also trade in futures and options on the Dubai Gold and Commodity Exchange where there has also been record trading volumes this year in marked contrast to the still dead Dubai Financial Market for local stocks.
The DGCX belongs to the Dubai Multi Commodities Centre, a freezone for commodity trading whose headquarters in the Diamond Tower of the Jumeirah Lakes opposite the Dubai Marina sits on top of a massive vault.
Clearly Dubai is set to cash in on any further boom in precious metal prices and ArabianMoney thinks that is inevitable as inflation will follow the money printing of global central banks as night follows day (click here).
-- Posted Thursday, 13 October 2011 | Digg This Article | Source: GoldSeek.com
comments powered by DisqusPrevious Articles by Peter Cooper 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.
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