'Dubai gold trade volume should continue to grow'

Addressing over 500 industry professionals at the Third Dubai Precious Metals Conference 2014 (‘DPMC 2014’), hosted by DMCC, 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 cent  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 $ 75 billion of gold (2,250 tonnes) was traded through Dubai in 2013, 73 per cent increase over 2012 and representing nearly 40 per cent of global physical trade volumes. With world demand declining by 15 per cent 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.

The second day of the DPMC 2014 themed ‘Engaging with Africa’ opened this morning with a keynote address delivered by Jean Louis Ekra, President & Chairman-Board of Directors, African Export-Import bank, titled ‘Towards a New Partnership with Africa’. The keynote was followed by a series of lively panel discussion where topics debated included ‘Engaging with Africa’, ‘Consumption Moving East’; ‘Adapting to Changes in Indian Regulations’; ‘Comparison of Global ‘Loco’ Markets’, A Focus on White Metals with Jeffrey Rhodes of the BTC Group and finally a debate on  ‘Price Outlook for Gold, Silver, Platinum and Palladium’.    

The third edition of the DPMC brought together 19 exhibitors and 500 delegates from 31 countries.




 

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