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- Dubai 05:31 06:45 12:35 15:51 18:20 19:34
For years Dubai’s bulk gold trade has depended on ‘Wastaa’, meaning a third person known to both the buyer and seller, coming in to authorise the trade. Thus instilling confidence into both the parties.
Apparently hundreds of e-mails detailing a quantity of gold available for sale and the preferred mode of transaction exchange accounts in Dubai everyday. If one of the genuine traders is to be believed, more than 90 per cent of such e-mails come from a clueless trader who would not be able to deliver gold if someone indeed agrees to buy. “Gold in bulk mostly originates from countries located north of the equator in Africa. A genuine trader from a country such as Ghana would send one e-mail to his contact in Dubai citing that he has a certain amount of gold for sale. The e-mail is let loose in Dubai allowing several new traders looking forward to making a cut in the deal to come into the picture,” a gold trader said. “When someone asks for the delivery of gold, such a trader is not able to deliver it for he does not know the original seller,” the trader added.
A typical e-mail looking for a gold buyer is about a paragraph long, talks about the form of gold which can be made available and seeks payment through close involvement of banks.
Sellers basically offer a discount on the current rate of gold to strike a deal. “If the original discount offered by the person holding the gold is two per cent, a prospective buyer may in the end be offered 0.5 per cent, because it is in the discount that a trader earns his money. People come into the trade thinking that even if they strike one such deal in months, it would results in a good amount of money,” said the trader.
While the number of genuine dealers in bulk volumes of gold would stand at 25, the number of these clueless online traders might well be into thousands, said traders.
Dubai has always been a favoured destination for bulk gold trade. And therefore several individuals have emerged as brokers in wholesale gold business, many of them clueless about gold trade. “Financial institutions always have someone especially deployed to look for gold in bulk quantities in Dubai. They basically buy their gold from the mammoth wholesale [gold] markets in Dubai. This trade has gone for years and so people see an opportunity in online brokerage,” said Sajith Kumar P K, CEO of JRG International Brokerage, a Dubai-based commodities brokerage house.
While news of volumes such as 750kg or even as high as 20 to 30 tonnes of gold available for sale still sounds reasonable, the likelihood of a fraud emerges if the amount mentioned is absurdly high. “If someone is talking about having 850 tonnes of gold available with him for sale, it’s definitely a fictitious claim,” said the CEO of a DMCC-registered company.
Dubai is the largest re-exporter of gold in the world and according to figures of DMCC, annual imports in 2008 stood at 674 tonnes, exports stood at 371 tonnes. Sources at the DMCC confirm that they have been receiving such e-mails.
“They come from private accounts of Gmail and Hotmail. They talk about availability of gold dust. More than 90 per cent of such e-mails are sent by frauds and many of them originate in Africa,” said the sources.
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