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Expert Forecasts Dubai Gold Trade Volumes Should Continue To Grow

April 08 2014
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US-based analyst John Hathaway addresses 500 industry professionals at Dubai Precious Metals Conference – comment made after DMCC reveals 73% volume increase in gold, valued US$ 75 billion, traded through Dubai in 2013

 

Addressing over 500 industry professionals at the Third Dubai Precious Metals Conference 2014 (‘DPMC 2014’), hosted by DMCC, in association with Foretell and title sponsor Standard Bank, yesterday (Sunday 6 April) US-based analyst and portfolio manager for Tocqueville Asset Management, John Hathaway forecast that Dubai’s gold trade volumes should continue to grow so long as the emerging middle classes in Asia continue to grow and prosper.

“The Dubai story is part of the wider migration of physical gold away from financial centres. Dubai is a distribution point to all parts of Asia and that level of flow is dependent on the prosperity of the emerging middle classes in various Asian economies. So, as long as that continues I can’t see anything stopping that flow,” said Hathaway.

Hathaway, whose comments were made after delivering his keynote titled ‘Where Is Your Gold’ went on to explain the supply and demand dynamics of physical gold, justifying his forecasts for future Dubai gold trade volumes.

 

“Physical gold is very scarce, it’s hard to mine, hard to find and hard to finance. Supply only grows 1.5% per year relative to the above ground supply. The more physical gold that flows into Asia that isn’t traded will stay as a permanent insulation to protect their capital for generations, making it harder for western capital markets to play the game of paper gold,” he said.

Hathaway then turned to Shariah compliance. “The gold mining business, when conducted properly is by definition Shariah compliant so it’s very easy to construct a portfolio of companies that adhere to Islamic values. I see the expanding capital market in Dubai as a great opportunity for investors to expand their assets in a very important part of the world.”

Delegates were already in an upbeat mood following the earlier announcement by Ahmed Bin Sulayem, Executive Chairman, DMCC, that US$ 75 billion of gold (2,250 tonnes) was traded through Dubai in 2013, 73% increase over 2012 and representing nearly 40% of global physical trade volumes. With world demand declining by 15% this firmly underscores the Emirate’s global position as the global bullion hub.

“One constant throughout the entire conference, is Dubai’s ideal geographical position between the producers to its West and the consumers in the East, which once combined with its strong physical and financial infrastructure and a legal framework enhancing investor confidence, makes Dubai and the DPMC 2014 a conducive environment to conduct business,” said Gautam Sashittal, Chief Executive Officer, DMCC.

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