Gold Bars in Dubai Disappear, Some at 750% Premiums!

• Gold bars in Dubai disappear, some at 750% premiums! 
  by Shivom Seth, http://www.mineweb.com/
  The desire to own gold, as an investment and for jewellery purposes, has made itself felt in the physical market in India and in Dubai, where premiums are ruling at an all time high.
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  To cash in on the investor frenzy, gold dealers in Dubai have raised their premiums to 750%, given the prevailing uncertainties over the global economy. Renowned for its role as the best place in the world to buy gold, Dubai has had an impromptu gold festival under way. The Dubai market is dominated by Indians.
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  While some traders are selling gold bars at a premium of $50 per ounce, others are pushing mark ups as high as 750% above normal, say retailers. Most gold traders are reluctant to release more gold into the market as they expect prices to peak as demand increases. Right now, Dubai is facing a shortage of gold.
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  After scaling an all time high of $1,924 per ounce in September 2011, the precious metal slid to $1,335 on April 16 – a decline of 30% from its peak. That has got shoppers in a frenzy in Dubai.
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  The majority of shoppers queuing up in front of jewellery stores, mostly in the Meena Bazaar and the gold souk (market) areas in Dubai are Indians, with a sizeable segment hailing from Kerala. Dubai merchants say sales have jumped by 400% following the recent price plunge. The consumption pattern reflects typical Indian preferences.
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  The majority of Indian consumers in Dubai do not prefer paper gold in the form of exchange traded funds (ETFs). Though gold coins and bars are amongst those items that are hot selling, the bulk of the purchasing since the prices fell has been in the form of jewellery.
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  K.V. Shamsudheen, director, Barjeel Geogit Securities, a broking firm, says the sharp drop in prices has coincided with the marriage season in Kerala, in South India, that starts from June. “That is one of the significant contributory factors driving up demand,” he adds.
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  Moreover, trading on the Dubai Gold and Commodities Exchange hit record volumes on April 16. The Exchange saw the highest ever overall daily trading value of $3.8 billion, with a record 103,126 contracts.
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