Gold in UAE: 20% less than market price?
“Buy gold now at 20 per cent discount below market price. Limited quantities available so act.” This was an SMS sent earlier this week by a commodity trading company operating from Dubai.
Is it a marketing gimmick or a dubious scheme?
Posing as an investor, when this reporter called the company, a senior consultant (name withheld) said: “This is the best opportunity to buy gold… we are selling it 20 per cent below the current market price.”
As per the offer, the minimum quantity that one has to buy is seven ounce, which will roughly cost Dh34,536. Gold in physical form will be delivered between two and four months.
“We don’t sell gold to you directly. Once you make the payment, we will block the quantity of gold with the mining company in the US with which we have tied up. It’s the gold ore, that you buy, and so we get a 20 per cent discount. Once the US company delivers the gold to us, we will hand it over to you.”
The consultant claimed all the money will be held by the company in a Dubai bank account and not be released to the US mining company till physical delivery of the gold.
He claimed that they had never defaulted on their commitment, but in case the gold was not delivered, they will return the money to the investor.
“If you buy then we advice you to hold your gold for at least 8 to 10 months and thereafter you will make a profit of nearly $700 an ounce.”
The consultant said they had reserved 10,000 ounce for sale in the UAE and had already sold 8,000 ounces in the past one week.
Last week, Goldman Sachs said it was sticking to its average forecast of $1,413 for an ounce of gold this year but expected gold to average $1,165 an ounce in 2014 as previously forecast.
Gold prices have recovered from a near three-year low of $1,180.71 hit on June 28 after Fed Chairman Ben Bernanke assured that any stimulus tapering would not be disruptive, many see the market dropping further down the road.
HSBC Global Research has cut its gold price forecast for the rest of the year to a $1,125 and $1,375 per ounce trading range.
“The discussion by the Federal Reserve of a tapering, or reduction, of its quantitative easing asset purchases was more aggressive than initially envisaged, is negative for gold,” it said.
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