Dubai gold storage facility opens
Posted on 23 April 2009 with no comments from readers
The new gold vaults under the headquarters of the Dubai Multi Commodities Centre will open on Sunday as the City of Gold ups its bid as a regional centre for the burgeoning investment interest in the yellow metal.
The DMCC is a free zone for commodities trading in which companies pay no taxation, and the new vault is intended for both short and long term storage of precious metals and other high-value products.
Safe haven
This capitalizes on the UAE’s reputation as a safe haven with stable politics, economics and geology as Dubai is away from the earthquake zone.
Investors are also increasingly looking to move their real assets away from established financial centres for fear of seizure in times of economic emergency. The owning of gold was made illegal and deposits confiscated in the USA in the 1930s, and investors were left empty handed as the price of gold took off.
Offshore investors are also worried about growing moves by advanced countries to rob them of their traditional right of secrecy in tax havens. Again geographic diversification to new locations is a logical response.
Dubai is already one of the world’s biggest centres for trading gold and handles a throughput of around a fifth of global annual gold production. Most recently the DMCC has launched a gold exchange traded fund to capitalize on this status, but trading has been in very limited volume thus far.
The new vault is open to local and international banks as well as investment companies, and features the very latest in security equipment and inventory monitoring.
Investment products
This leaves open the possibility of creating new investment products for high net worth and institutions that wish to hold gold in a safe location not linked to traditional global financial centres.
Dubai has a long history of providing advanced infrastructure for new business and financial opportunities, and the opening of the new storage vaults for precious metals seems to be yet another example.
Now what the DMCC needs is a spike in gold and silver prices as paper currencies come under pressure from surging global money supply, and Dubai will have another success story to tell.
