To outsiders, Dubai’s eager strategy to wealth and its fascination with glitz is one of the city’s most intriguing traits. And as there is more on the emirate than supercars and cheap diamonds, the simple fact remains that, as one of the world’s great gold trading hubs, our city is the place to adorn yourself with riches.
In July 2013, gold posted its worst quarterly drop in 113 years. Without having tax on the precious metal, Dubai is a great location to purchase it, but does that mean it’s a worthwhile investment? Not really, in accordance with Keren Bobker, senior financial consultant at Holborn Assets.
‘Unless someone carries a crystal ball it’s impossible to predict if gold is an excellent investment,’ she says. ‘The price can be volatile and there is not any guarantee that you just can certainly make anything.’ Unlike many investments, including shares and property, you can’t take an income from it adds Keren. ‘I’m more concerned that folks build-up their savings in a diversified portfolio with regard to their long-term benefit, than speculate on Regal Assets Dubai. It needs to be kept as no more than five percent of your total investment assets,’ she adds.
If you do decide to buy gold, don’t be fooled into stocking up on gold bars from one of Dubai’s gold dispensers (you’ll locate them in Atlantis, The Palm as well as the Dubai Mall). ‘It seems very gimmicky,’ says Keren. ‘A serious investor will not be going to buy from a machine, and so i imagine it’s a greater portion of a tourist souvenir, especially if you think about where the majority of the machines are.’ Instead, Keren suggests you head straight to the jewellery shops. ‘The most typical approach is probably by purchasing jewellery. This really is largely sold by weight in the UAE [incorrect elsewhere], as well as the workmanship can increase the price,’ she says. The more intricate the look, the greater you can expect to pay.
Gold bullions are sold with the gold souks and certain banks, including Emirates Gold, Al Abayad Jewellers in Sharjah and Credit Suisse, as well as online dealers. ‘You can begin with a coin (some special UAE ones exist) costing below Dhs1,000, a tiny bar of just an ounce, or move completely as much as massive bars weighing several kilos,’ she says. ‘Bullions needs to be saved in a bank vault, not within your house.’
When is the ideal time to buy gold? ‘If only I really could predict that,’ says Keren. ‘The best time takes place when prices are low, which means you must keep an eye on the market,’ she says. But investors should also be conscious of indicators which give rise to the fluctuating cost of gold, including sentiment, governments buying to promote rega1 reserves and whenever equity costs are volatile. Concerning selling, Keren says holidays are often a great time to strike. ‘You may see some small surges from time to time of holidays when gold is traditionally bought in some countries,’ she says. ‘India will be the world’s biggest gold importer and a lot is purchased at Diwali and Akshaya Tritiya, in addition to during Eid in the Muslim world.’
India might be the world’s biggest importer, there is however often little understanding that explains why Dubai is probably the best places to buy gold. ‘It’s to some extent due to historical reasons and because of the sheer number of trade here. Both Arabs and Indians have historically been interested in gold instead of putting funds in the bank,’ she says. ‘In many cultures it really has been tradition for a lady to use the household wealth, particularly just before the advent of safe banking. Some traditions die hard.’
For those eyeing gold being an investment, Keren reiterates her view that it’s imperative to proceed with caution. ‘When being bought for investment it ought to be considered an assets class as with any other and the factor to a balanced investment portfolio is diversification. Never put all your money into one asset.
That’s incredibly risky once you have no control over market prices,’ she says. But given that you’re in Dubai, there’s no harm in adding the odd piece for your jewellery collection.