Abu Dhabi jewellers are struggling to cope with surging demand for gold bars from customers expecting the price of the precious metal to rise even further, despite increasing more than 25 per cent this year.
Stocks traded on the Abu Dhabi Securities Exchange have lost 4.7 per cent over the same period.
The bull run in the gold market has transformed the business model for jewellers countrywide, who are replacing lost revenue from declining jewellery sales with the booming bullion trade.
After rising for seven consecutive weeks, the longest rally since April 2007, the metal suffered a reversal late last week, falling by about 5 per cent since August 19.
But it rose again on Friday, advancing 4.3 per cent to US$1,786.45 after Ben Bernanke, the US Federal Reserve chairman, said there were no plans to provide further stimulus measures.
"The global economy looks like it is heading towards what we faced in 2008," said Tareq Alashram, a 34-year-old Syrian electronic engineer who bought two 200-gram bars last week at Abu Dhabi's Madinat Zayed Shopping & Gold Centre.
"If I put my money in an Islamic bank account I will get a maximum of 2 per cent from any bank and there is nothing to hedge me against inflation."
Gold is forecast to average $2,000 a troy ounce next year, Barclays Capital said in a report on Friday.
Up to 30 customers a day are buying gold bars of 100 grams for about Dh22,000 (US$5,990) and 1kg bars for about Dh220,000 at Al Awadhi Jewellery in the centre.
Abdullah Mohamed, the manager, said sales of these bars had surged by as much as 60 per cent in the past two months.
"I am selling 2 to 3 kilos worth of gold slabs a day to Emiratis, Arabs and Indians. For every five customers that walk into my shop, three are asking for those slabs," Mr Mohamed said. "They are buying them because they know they won't take losses if the price drops like with jewellery, where a premium is paid for the cost of craftsmanship and commission."
The number of customers coming and asking about them is incredible, said Riyad Musbah, the manager at Al Reyadh Jewellery, which is also in the centre.
"When gold hit a record of $1,215 an ounce last year and broke several barriers since we didn't see this kind of interest. But people are now becoming more aware with what is going on abroad and coming to terms with it," Mr Musbah said.
"Two months ago barely any customers would ask for these slabs, now easily 50 per cent of the customers that walk in are asking for them. The hoard is catching on gold prices rocketing. Those with spare income or excess cash are thinking they might as well not lose out on an investment opportunity."
Suppliers of gold bars to jewellers say they are struggling to ensure there is adequate supply to meet demand.
"In the last 45-50 days sales have gone up by 35 per cent for these bullion bars," said Pauly Anthony, a financial controller at Gold Standard, a Dubai gold supplier.
"The bars are usually imported from Switzerland and Europe, but with most refineries in Europe closed or not functioning at full capacity, supply is now less than demand," he said.
"Most of the shops are running out of stock. Nobody was prepared to absorb the market condition here in the UAE."
Local suppliers are now increasing deliveries to compensate for the rising demand and tightening supply from Europe.
Gold imports have almost halved this month while local supplies, which used to account for 5 to 10 per cent of the market, have increased to 20 to 25 per cent.
halsayegh@thenational.ae
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
UAE%20v%20West%20Indies
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The specs
Engine: 3.8-litre twin-turbo flat-six
Power: 650hp at 6,750rpm
Torque: 800Nm from 2,500-4,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 11.12L/100km
Price: From Dh796,600
On sale: now
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
The specs
Engine: 4-litre twin-turbo V8
Transmission: eight-speed PDK
Power: 630bhp
Torque: 820Nm
Price: Dh683,200
On sale: now
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AT4 Ultimate, as tested
Engine: 6.2-litre V8
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Transmission: 10-speed automatic
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THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
Bareilly Ki Barfi
Directed by: Ashwiny Iyer Tiwari
Starring: Kriti Sanon, Ayushmann Khurrana, Rajkummar Rao
Three and a half stars
Red Joan
Director: Trevor Nunn
Starring: Judi Dench, Sophie Cookson, Tereza Srbova
Rating: 3/5 stars
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EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
