Fully Shariah-compliant Dubai Gold Shares have been launched by the World Gold Council (WGC) and Dubai Multi Commodities Centre (DMCC), as the first Islamic shares of the precious metal in the region.
James Burton, chief executive officer of WGC, told Emirates Business: “We started trading gold shares in 2002 with the aim to increase demand and give people greater access to the metal.
Currently, there are nine stock exchanges in the world where gold shares are traded, but this is the first time we have come up with this financial product in the Middle East. In fact, this is the first dollar-priced security of its kind to be fully Shariah compliant.
“This is a huge opportunity for us since there are no Islamic gold shares available in the region. This product is simple, secure and an efficient method of accessing physical gold based on Islamic principles, which may be of interest to many investors here.
Moreover, it is cost-efficient as the investors do not incur insuring, storing and transaction costs as is in physical gold,” he added.
Based on WGC’s research, Moaz Barakat, the council’s managing director for the Middle East, Turkey and Pakistan, believes there is a huge market for gold here.
“Total gold imports reached 559 tonnes in 2007 and we believe this product will attract investors from all over the world and specifically from Islamic countries. Any investor from the region can buy these shares through a broker authorised by DMCC and WGC,” he told Emirates Business.
Dubai Gold Shares will form an integral part of the Exchange Traded Gold (ETG) family of products, and one security will be equivalent to 1/10th of an ounce of gold. Each security will be backed by an equal amount of physical gold that will be Dubai and London Good Delivery Standard and will be held at DMCC and HSBC.
To ensure Dubai Gold Shares are wholly Shariah compliant, WGC and DMCC have retained Shariah Capital as their advisor. The organisation will review contracts and agreements relating to the shares and ensure they are consistent with Islamic principles .
Gold held by products in the ETG stable now exceeds $24.2 billion or 806 tonnes as of March 31, 2008.
DMCC and WGC unveil gold shares