Investing in one of the world’s most precious metals can be a daunting and risky business. Time Out gets advice from a local expert, regardless of whether you’re after bars, bullion or kilos.
To outsiders, the UAE’s eager approach to wealth and its fascination with glitz is one of the region’s most intriguing traits. And while there is more to the Emirates than supercars and cheap diamonds the fact remains that, as one of the world’s great gold trading hubs, the UAE is the place to adorn yourself with riches.
But in July 2013, gold posted its worst quarterly drop in 113 years. Investors were stung as the market turned, proving that you need to tread carefully when dipping your investing toe into the shiny stuff. With no tax on the precious metal, the UAE is still an ideal place to buy gold, but does that mean it’s a worthwhile investment? Not necessarily, according to Keren Bobker, senior financial consultant at Holborn Assets. ‘Unless someone has a crystal ball it’s impossible to predict if gold is a good investment, because the price is affected so much reciprocally by the global economy’ she says. ‘The price can be volatile and there is no guarantee that you will make any money.’
Unlike many investments, including shares and property, you can’t take an income from it adds Keren. ‘I’m more concerned that people build up their savings in a diversified portfolio for their long-term benefit, than speculate on gold. It should be kept as no more than five percent of your total investment assets,’ she adds.
If you do decide to invest in gold, don’t be fooled into stocking up on gold bars from one of UAE’s gold dispensers. ‘It seems very gimmicky,’ says Keren. ‘A serious investor is not going to buy from a machine, so I imagine it’s more of a tourist souvenir, especially when you consider where most of the machines are.’
Instead, Keren suggests you head straight for the jewellery shops. ‘The most common way to invest is probably by buying jewellery. This is largely sold by weight in the UAE [not the case elsewhere], and the workmanship can increase the price,’ she says. The more intricate the design, the more you can expect to pay. When you go, make sure the store is registered and that you’re paying the current day prices – useful resources to keep and eye on are the Dubai Gold & Jewellery Group www.dubaicityofgold.com and the Emirates NBD website www.emiratesnbd.com.
Gold bullion can be found at the gold souks and certain banks. ‘You can start with a coin (some special UAE ones exist) costing less than Dhs1,000, a tiny bar of just an ounce, or move all the way up to massive
bars weighing several kilos,’ Keren says. ‘Bullion should be kept in a bank vault, not in your house.’
So when is the best time to buy gold? ‘If only I could predict that,’ says Keren. ‘The best time is when prices are low, so you must keep an eye on the market,’ she says. But investors should also be aware of indicators which contribute to the fluctuating price of gold, including sentiment, governments buying to sell gold reserves and when equity prices are volatile. As for selling, Keren says holidays are often a good time to strike. ‘You may see some small surges at times of holidays when gold is traditionally bought in some countries,’ she says. ‘India is the world’s biggest gold importer and a lot is bought at Diwali and Akshaya Tritiya, as well as during Eid in the Muslim world.’
India may be the world’s biggest importer, but there is often little understanding as to why the UAE is one of the best places to buy gold. ‘It’s in part due to historical reasons and due to the sheer volume of trade here. Both Arabs and Indians have historically been keen on gold as an alternative to putting money in the bank,’ she says. ‘In many cultures it has been tradition for a woman to wear the family wealth, particularly
before the advent of safe banking. Some traditions die hard.’
For those eyeing gold as an investment, Keren reiterates her view that it’s imperative to proceed with caution. ‘When being bought for investment it should be considered an asset like any other, and the key to a balanced investment portfolio is diversification. Never put all your money into one asset. That’s incredibly risky when you have no control over market prices,’ she says.
Gold products in Abu Dhabi
Have a 24k cappuccino at Emirates Palace where the food and drinks are sprinkled with gold leaf. Emirates Palace Hotel, Ras Al Akhdar (02 690 7725).
Get a face full of the stuff at Sisters Beauty Lounge, where you can have a gold-encrusted facial. Khalifa Bin Shakbout Street, Al Bateen (02 222 2502).
Have a 24k temporary tattoo in various designs and sizes – prices start from Dhs75. Pinky Nails Spa, Tourist Club Area (02 643 0175).
Where to buy gold in Abu Dhabi
Best prices
There is a reason they call Madinat Zayed ‘the gold souk’. As Abu Dhabi’s gold destination, haggling is okay here and the variation and competition is enormous. If you are looking to invest, this is the place to go.
Madinat Zayed Gold Centre and Shopping Centre, www.madinatzayed-mall.com (02 633 3311).
Get your jewellery
There are various stores around selling the marketable form of the metal. Al Futtaim Watches and Jewellery at Al Wahda or Index Jewellery at Al Markaziyah are some of the high-end ways to enjoy the experience.
Al Futtaim Watches and Jewellery, Al Wahda Mall (02 443 7230) and Index Jewellery, Hamdan Street (02 621 0983).
Vending machines
Okay, so they aren’t the best value investment – but isn’t it fun!? Get your own slice of the action – this is more for people who aren’t looking for an investment so much as a novelty.
Emirates Palace, Ras Al Akhdar (02 690 7725).
