Posted on 07 January 2011 with no comments from readers
What is billed as the world’s largest gold factory is set to open in Jeddah in the Kingdom of Saudi Arabia before the end of the year, reported Arab News. Taiba for Gold and Jewels Company’s 220,000 sq ft facility is already under construction, and will employ 800 when completed.
It was only last year that the oil-rich kingdom surprised the world with the revelation that gold reserves held by its central bank had more than doubled from 143 to 322 tons, ranking Saudi Arabian gold reserves the largest in the Middle East. Now the focus is on burgeoning demand from the retail sector. Taiba has 2,500 retail outlets across the kingdom.
UAE jewelry sales falling
However, this is more of a risk than it appears. In the neighboring UAE the demand for jewelry has been falling as gold prices advanced over the past few years, although this may have more to do with the real estate bust that followed the global financial crisis (click here).
Globally Saudi Arabian gold reserves rank 16th with only 13 other nations and the IMF and ECB with higher reserves. In recent years the authorities have clearly thought a diversification into precious metals a wise move for protecting the value of foreign exchange reserves.
Whether this appetite for gold will now engage the retail consumer remains to be seen, but would be the classic next stage of a gold mania. That said silver may still be the better buy for maximum price appreciation (click here).