To outsiders, Dubai’s eager approach to wealth along with its fascination with glitz is one of the city’s most intriguing traits. And as there is more towards the emirate than supercars and cheap diamonds, the simple fact remains that, as the world’s great gold trading hubs, our city is where to adorn yourself with riches.
In July 2013, gold posted its worst quarterly drop in 113 years. Without tax around the precious metal, Dubai is a perfect destination to purchase it, but does that mean it’s a worthwhile investment? Not really, as outlined by Keren Bobker, senior financial consultant at Holborn Assets.
‘Unless someone has a crystal ball it’s impossible to calculate if gold is an excellent investment,’ she says. ‘The price can be volatile and there is no guarantee which you can certainly make anything.’ Unlike many investments, including shares and property, you can’t take earnings from it adds Keren. ‘I’m more concerned that folks build-up their savings within a diversified portfolio with regard to their long term benefit, than speculate on watch video here. It needs to be kept as a maximum of 5 percent of your total investment assets,’ she adds.
Should you do decide to invest in gold, don’t be fooled into stocking up on gold bars from one of Dubai’s gold dispensers (you’ll discover them in Atlantis, The Palm as well as the Dubai Mall). ‘It seems very gimmicky,’ says Keren. ‘A serious investor is just not planning on buying from the machine, therefore i imagine it’s even more of a tourist souvenir, especially considering where the majority of the machines are.’ Instead, Keren suggests you head straight for the jewellery shops. ‘The most popular strategy is probably by buying jewellery. This really is largely sold by weight within the UAE [untrue elsewhere], along with the workmanship can raise the price,’ she says. The greater number of intricate the design and style, the greater you will definitely pay.
Gold bullions can be bought with the gold souks and certain banks, including Emirates Gold, Al Abayad Jewellers in Sharjah and Credit Suisse, in addition to online dealers. ‘You can start with a coin (some kind of special UAE ones exist) costing less than Dhs1,000, a little bar of just an ounce, or move all the way up around massive bars weighing several kilos,’ she says. ‘Bullions must be saved in a bank vault, not in your home.’
So when is the best time for you to buy gold? ‘If only I was able to predict that,’ says Keren. ‘The best time happens when charges are low, so that you must keep an eye on the market,’ she says. But investors should be mindful of indicators which play a role in the fluctuating value of gold, including sentiment, governments buying to market rega1 reserves and when equity prices are volatile. In terms of selling, Keren says holidays are often the best time to strike. ‘You may see some small surges occasionally of holidays when gold is traditionally bought in certain countries,’ she says. ‘India will be the world’s biggest gold importer plus a lot is bought at Diwali and Akshaya Tritiya, along with during Eid in the Muslim world.’
India may be the world’s biggest importer, there is however often little understanding that explains why Dubai is amongst the best places to buy gold. ‘It’s in part due to historical reasons and due to sheer level of trade here. Both Arabs and Indians have historically been interested in gold rather than putting money in your budget,’ she says. ‘In many cultures it really has been tradition for a lady to use your family wealth, particularly ahead of the coming of safe banking. Some traditions die hard.’
For people eyeing gold for an investment, Keren reiterates her view that it’s important to proceed with caution. ‘When being bought for investment it should be considered an assets class like every other along with the answer to a healthy investment portfolio is diversification. Never place all your cash into one asset.
That’s incredibly risky once you have no power over market prices,’ she says. But provided that you’re in Dubai, there’s no harm in adding the odd piece for your jewellery collection.