Precious metals trade: Dubai widens its role

Dubai’s gold trade volumes should continue to grow so long as the emerging middle classes in Asia continue to grow and prosper, forecasts John Hathaway, US-based analyst and portfolio manager for Tocqueville Asset Management.
He was addressing over 450 industry professionals at the Dubai Precious Metals Conference in Dubai.
“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,” added Hathaway.
Hathaway, whose comments were made after delivering his keynote titled ‘Where Is Your Gold’, went on to explain 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 percent per year relative to the above ground supply,” Hathaway said.
“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.
“Dubai has risen as the destination for global precious metals trading. In 2013, almost 40 percent of the world’s physical gold trade came through Dubai and the value of total gold traded through Dubai grew to $75 billion, compared to $6 billion in 2003,” Ahmed bin Sulayem, DMCC executive chairman, remarked in his opening speech.
Dubai also saw an annual trade volume increase of 73 percent accounting for 2,250 tons of gold.
This market has proven to be resilient under all conditions; even on a year where total global demand fell by 15 percent, Dubai gained from near-record consumption demand growth.
These figures represent a significant shift in the balance of global demand flows with Dubai positioned as one of the global market leaders.