Dubai’s gold trade volumes should continue to grow so long as the emerging middle classes in Asia continue to grow and prosper, said an expert.

 

John Hathaway, a US-based analyst and portfolio manager for Tocqueville Asset Management, pointed it out while addressing more than 500 industry professionals at the third Dubai Precious Metals Conference 2014, hosted by Dubai Multi Commodities Centre (DMCC), in association with Foretell and title sponsor Standard Bank yesterday (April 6).

 

“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.

 

He also explained 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.

 

“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,” he added.

 

Ahmed Bin Sulayem, executive chairman, DMCC, said that $75 billion of gold (2,250 tonnes) was traded through Dubai last year, up 73 per cent over 2012 and representing nearly 40 per cent of global physical trade volumes.

 

The second day of the conference, under the theme ‘Engaging with Africa’ opened today will a keynote address entitled ‘Towards a New Partnership with Africa.’ 

 

It was followed by a series of panel discussions 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.’ - TradeArabia News Service