Business24-7 reports that DMCC vault may store region's gold reserves.
(emphasis mine) [my comment]
DMCC vault may store region's gold reserves
DMCC's new vault became operational on April 26. (EB FILE)
By Shashank Shekhar on Wednesday, May 13, 2009
Much of the region's gold that has so far been held in London may soon return. [This is a huge development.]
[DMCC = Dubai Multi Commodities Center]
The new vaults of DMCC will be a home to the gold allocated to the Dubai Gold Securities (DGS) Exchange Traded Funds (ETFs). The vault may also become a natural choice for storage of gold reserves by central banks in the regional market, analysts said.
While the gold allocated to DGS [and GLD] is [supposedly] kept at HSBC's vaults in London, the gold reserves held by GCC's central banks are held by various other vaults in London, market sources said. Gold vaults have existed in London for more than 150 years. [London has been ground zero for every attempt to manipulate gold prices.]
DMCC's new vault became operational on April 26 this year. "We want to bring the gold held under DGS ETFs at the HSBC vaults in London to Dubai. What has been holding us back is the difference in gold specification between London and Dubai," a DMCC official told Emirates Business. Until May 11, the total number of DGS traded stood at 15,200. Each security approximately amounts to one-tenth of an ounce of gold.
Though DMCC officials have declined a direct comment on the matter, a spokesperson with the centre said that ample care has been taken to make the vault "better than the others".
Another DMCC official said that the vault will also be used to store precious metals associated with the ETFs that may be launched in Dubai later this year. At a press conference organised recently, senior DMCC officials had disclosed that they plan to launch new "precious metal ETFs" in Dubai. The ETFs will be traded at Nasdaq Dubai, the Dubai-based regional security exchange where the DGS trades.
Prominent gold dealers in Dubai say that it's "only natural" for the central banks in the region to store their gold in DMCC instead of London, where they have typically held their bullion reserves so far.
"It's a natural home for the central banks in the region to store their gold in Dubai rather than in London where they have typically held their gold. Particularly when DMCC has a state-of-the-art facility to store such precious metals," said Jeffrey Rhodes the CEO of INTL Commodities DMCC, a Dubai-based gold dealer.
In a statement released recently, the DMCC had claimed that its vault combines the advantages of a "unique" location together with the "highest" security standards.
"The vault is intended for both short and long term storage of precious metals and other high-value products. The vault will be open to local and international banks, corporates, HNWIs and DMCC members and uses the latest security equipment and inventory management systems," the statement said.
"With the DMCC vault commencing operations, we can now further support this tradition by offering state-of- the-art infrastructure and storage facilities that are an essential feature of a successful commodities hub," David Rutledge, CEO of DMCC was quoted as saying. Gold imports into Dubai jumped 15 per cent in the first quarter of 2009, the Dubai Multi Commodities Centre announced recently.
The emirate imported a total of 140 tonnes of gold in the first quarter of 2009 up 15 per cent as compared to 122 tonnes imported during the January-March 2008 period, DMCC said.
My reaction: London is soon going to see a huge outflow of gold.
1) DMCC's new vault became operational on April 26 this year.
2) ETF gold from DGS will be moved to these new vaults
3) Gold reserves of regional central banks' also likely to shift from London
4) This move by Dubai is evidence of a loss of confidence in London' s gold market.
Conclusion: London is FINALLY losing its role as the world' s hub for physical gold storing and trading. It is going to be very interesting to see what happens when DGS tries to move its gold from HSBC in London to Dubai. HSBC is the custodian of both DGS and GLD, which raises a major question mark about whether the gold is really there.
The growing demand for physical gold together with the tons of gold flowing out of London to Dubei will result in a major default somewhere on an obligation to deliver gold. After that, paper gold (futures, GLD, etc…) will collapse, and physical gold will soar.