Cumulative volume at 27,691 shares traded since launch in March
Total inflows into gold ETFs rose by 46 tonnes and 459 tonnes in the second and first quarters respectively
The MENA region’s first Shariah compliant gold exchange traded commodity (ETC), Dubai Gold Securities, recorded an aggregate six-month volume of 27,691 shares, reflecting a fourfold increase since the end of March this year.
At a time when global interest in gold ETF/ETCs is soaring to new highs, Dubai Gold Securities — an initiative of the World Gold Council and the Dubai Multi Commodities Centre — provides a secure and efficient way of investing in gold for MENA region investors through a locally listed and traded equity that gives them direct exposure to gold price performance without the logistical difficulties and costs associated with storing and insuring physical gold.
Global interest in gold ETFs has risen recently on the back of a weakening dollar and inflation worries, which saw the gold price break through the $1,000-per-ounce mark again in September, a level it had last seen in February.
“Gold continues to exhibit its value as an effective portfolio diversification tool due to its low correlation to other key asset classes. Although investment demand in the second quarter of 2009 was down from the levels seen in the preceding three quarters, it was still strong,” said Grant Collins, Senior Managing Director, Dubai Commodity Asset Management (DCAM).
“For regional investors who are looking to diversify their investments or to take a tactical position in gold, ETFs/ETCs offer an excellent mechanism through which to obtain cost effective exposure.”
Collins said that the trading volume of Dubai Gold Securities, which stood at 6,865 securities in March, peaked in May to touch 12,855 securities, and noted that trading levels in September were very encouraging.
“Globally, demand in investment gold has remained robust in the first eight months of 2009. Investors continue to pursue a tactical allocation towards gold leading to increased holdings of gold ETFs/ETCs; a cost effective and efficient means for many investors to access the gold trade,” said Sameer Meralli, Managing Director, DCAM, commenting on trends in the sector.
“In the region, gold’s appeal as a hedge against dollar weakness and an outperformer in inflationary conditions has fuelled substantial interest in the metal. Demand is expected to increase further in the forthcoming festive season. Regional investors can easily take advantage of Dubai Gold Securities, whereby investors can access the deepest, most liquid gold OTC market in the world (London) with the benefit of continuous two-way prices during regular market hours on NASDAQ Dubai. Recently, investors have demonstrated their increasing awareness of the Dubai Gold Securities product as a gold proxy, as evidenced by the strong volumes so far this month.”
Global investment in gold rose to 222 metric tons, up 46% year-on-year in the second quarter of 2009, mainly led by gold ETFs, according to research published by the World Gold Council. Total inflows into gold ETFs rose by 46 tonnes and 459 tonnes in the second and first quarters respectively, taking the total gold held in funds to 1,694 tonnes worth US$50.8 billion.
Dubai Gold Securities LLP is incorporated in the Dubai International Financial Centre and can offer up to 1 billion Dubai Gold Securities under the Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. Dubai Gold Securities were first admitted to trading on NASDAQ Dubai on 2 March 2009.
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