They call it “the city of gold”. It is estimated that between 20 and 40 percent of the world’s gold stocks pass through Dubai every year. For more than a century, traders have frequented the souks of Dubai in search of spices, pearls and gold. This is how Dubai became famous as the city of gold. In the first nine months of 2020, 41 billion euros worth of gold was traded in the country, according to customs authorities. It is the second most profitable export category after oil. The city took advantage of its geographic location by setting up vaults, jewelry manufacturing facilities and refineries.
At Al Etihad they refine and convert gold into investment bullion. They supply banks and bullion dealers, but also jewelry wholesalers. The whole process takes place on site. Al Etihad is also an international benchmark for quality and technical specifications. The co-owner of the company, Salah Khalaf, finds Dubai to be the ideal place for such an activity: “In this city there is everything, in particular there is infrastructure, stability and security”, he assures us.
Like any commodity, the price can change, but at current market rates, a 10-kilo bar is worth just under 454,000 euros. This is where wholesalers come into play. Created by the Abdullah family in 1955, Jawhara specializes in the gold, jewelry and diamond trade. CEO Tawhid Abdullah explains: “At any given moment there are 40-50 tons available on the market, retail and wholesale. And it is thanks to these large quantities that our prices become the most competitive in the world.”
The gold and jewelry industry is well regulated. The Dubai Gold and Jewelery Group, a non-profit commercial body, has more than 700 members. Abdulla, who is its president, proudly states: “Our discipline and government control lead us to have a perfect product.”
Hence, a gold mine for brokers and tourists.
Up to 40 percent of the world’s gold passes through Dubai every year, and most of it goes to the gold souk. In this area alone, there are 300 shops in half a square kilometer. Brokers take advantage of the Dubai time zone, one of the few places in the world where it is possible to cover every area for exchanges, from Australia to the west coast of the United States. Jeffrey Rhodes of Rhodes Precious Metals Consultancy (Rpcm) has no doubts: “For me, the heart of the gold industry in the Emirates is where we are today, in Dubai’s gold souk.” According to him, the success of this sector in Dubai is due to “The people, the infrastructure, the leaders that allow the business to thrive. It is simply the cheapest place in the world to buy gold jewelry. In the rest of the world they are heavily taxed. This is the best place to buy. You get the most value for your money. “
Dubai gold is tax free for tourists. Many stock up at the souk or on the other side of town at Gold and Diamond Park.
With the pandemic, demand has collapsed, as in many other sectors. But in the fourth quarter of 2020, trade has increased, and in the city of gold they are convinced that the trend is set to continue.
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