*****Dubai Moving Its Gold Out Of London*****

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.

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14 Responses to *****Dubai Moving Its Gold Out Of London*****

  1. Anonymous says:

    London Bridge is falling down, good move Dubai. That's another signal of the end of a robbing World Currency: USD. You can use Yuan to buy products from China, however, what can you buy from US with the green backs? It says, go to another countries to buy what you want, don't bother me. That is the difference between Yuan and USD. After 38 years' stealing from the world, people of the world now know what is behind the Ponzi.

  2. Anonymous says:

    So, guess they'll wait until the gold reaches sandcastle central before launching the revolution.

  3. Anonymous says:

    Hey everyone (and Eric, this is gonna be a good one for you), you guys really need to check this youtube video out on Q&A; session with the fed reserve Inspector.

    They have no idea (actually they know exactly what they did, but just aren't saying) what happened to 2+ Trillion dollars.

    Hope everyone has made their hedges and bought a small life insurance policy just in case. Things are getting juicy.

    http://www.youtube.com/watch?v=PXlxBeAvsB8&eurl;=http%3A%2F%2Fwww.acurazine.com%2Fforums%2Fshowthread.php%3Fp%3D10890040&feature;=player_embedded

    Ed in CA

  4. Anonymous says:

    Hi Eric,

    I have a quick question, there was a great article about China you had listed in the beginning on the year under the "Key enteries" part of your blog. I have been trying to find it so that I could forward to some friends of mine, unfortunatley I am not able to find it.

    If there anyway to find older posts under the "key enteries" part of your website?

    Thanks.

  5. Numonic says:

    Eric can you answer my question: What makes the london market a "physical" market?

    I left messages in your "Travelling And Gold Breaking Upwards " blog.

    http://www.marketskeptics.com/2009/05/travelling-and-gold-breaking-upwards.html

    Here are the messages:

    "3 Comments:
    Numonic said...
    Eric, What causes the price of "paper" (not physical) gold/silver to rise?
    May 12, 2009 8:47 PM
    Numonic said...
    Wow you answered the question here and I missed it, the london market is a "physical" market. I just realized that.
    May 12, 2009 8:50 PM
    Numonic said...
    Actually Eric, I'm still confused. So you're saying that the spot price of gold is both the physical price and the paper price(just at different times in the day). Here is the most important question: What makes the london market a "physical" market and not a "paper" market? Unless the london market trades nothing but physical gold, gives NO certificates and stores no gold for any of it's investors, it can't be considered a "physical" market. Honestly as much as I understand about banking(price fixing/credit) and naked short selling and how it brings the price of gold/silver down, I can't understand whether we should be expecting the spot price of gold/silver to shoot up higher or crash down like the stock market.

    So my question is, what makes the london market a physical market?

    Honestly, I can't believe the london market is a physical market. It can't be. It wouldn't be in the stock market if it were physical. It's rare to find a physical market in gold/silver. Even Ebay is NOT a physical market being that you order the gold/silver by mail and thus you get a paper promise(receipt) that you will recieve the gold/silver. In a time of credit collapse, these promises will be abandoned. people will be doing more hand to hand at the same time exchanges. More coin shops will have to open up because people will loose faith in promises to deliver. So if the london price is the price in the market where investors around the world can buy and not recieve the physical gold/silver at the same time the money is transfered(like in a coin shop) then the london market can not be considered physical. What exactly makes the london market a physical market?

    Since I can't understand how the london market is a physical market my question remains: what causes the price of "london" gold/silver to rise?

    You talk about what drives the price down(naked short selling) but you don't talk about what drives it up.

    Also if the spot price is both the physical and the paper price just at different times of the day then where do you see the spot price going? Will it be a situation like when the "physical" market is open, the spot price for gold will be like $5,000/oz and when it closes and the paper price is open the spot price will be like $10/oz? Will there be that type of volitility in the market being that the spot price is both the physical and the paper price just at different times in the day?

    Eric this is confusing. I really hope you do some research on this and explain it. We understand naked short selling and how it brings prices down but this whole London(physical market) and US(paper market) under the same spot price is confusing. Please explain.
    May 17, 2009 2:55 PM

  6. Numonic says:

    I ask the question: "What's the future of the spot price of gold/silver?"

    We talk all day about how the spot price is being artificially depressed through credit/naked shortselling but at the same time talk about backwardation in the silver/gold market(meaning the spot price will drop low because people will be abandoning paper promises for the gold/silver). So what is it? Will the "spot" price shoot up high because of the credit collapse/end of naked shortselling or will the "spot" price crash down low because of an abandonment of paper promises for the metals(i.e GLD, SLV)?

    I like to think and figure things out on my own and here's how I see the spot gold/silver market playing out:

    I'm trying to make sense of it and here's how i see it playing out: Credit will collapse, causing the artificial supply of gold/silver to drop causing the spot price to rise in the near term but because this rise in price will be due to defaults(without Fed Note compensation/settlement), people will abandon promises to deliver gold/silver and the price will drop. The rise in price of spot gold/silver will go very high but will not last long as the rise in price will be due to massive defaults with no credit(no available Fed Notes) to mask the defaults to keep the supply artificially high and thus the artificial supply will drop causing the spot price to rise high(espeicially because of how overlevereged the gold/silver market is). The rise in the spot price will not last because it will be due to massive defaults(massive failures to deliver not the metal but the Fed Notes) which will cause a massive exodus out of paper promises to deliver gold/silver.
    So the answer to what causes the spot price to rise is: defaults with no available cash(credit) to cover up the default. But defaults are also the catalyst to price dropping as investors flee from paper promises of gold/silver because they see their chances of getting stiffed even on the settlement of cash increasing. And thus promises are abandoned as those promises are not even good to deliver Fed Notes as the Fed Notes due to the great credit contraction will not be available for settlements and allot of people will not even be able to settle in cash, let alone recieve the physical metal. Allot of people will get nothing for their paper promises and this will cause the exodus out of paper promises and cause the spot price to crash down.

    I guess that's how it will play out. I know we will have a great credit collapse. This will make it impossible for the banks to stop defaults as it is the availibility of cash(Fed Notes) that masks the defaults and the spot price will rise in the short term due to the decrease in artificial supply but will drop because of a massive exodus out of paper promises (i.e GLD, SLV) due to the failure to compensate the defaults with cash. It has more to do with the availibility of cash than the metal as it is the availibility of cash that has been keeping the price low all these years. The goal was to keep the spot price low but also keep cash available. The spot price will be low but not because of available cash/credit/naked short selling but because of a lack of available cash/credit/naked short selling that will cause a massive exodus out of paper promises as the promise to deliver gold/silver will not even be able to deliver cash.

    In order to stop this great credit contraction, Zimbabwe size Fed Notes will have to be created and implemented in to this Quantitaive Easing. If these companies weren't getting the money they need from the govt. they would be getting it from the customers and prices will not rise because of an ease in credit, prices will rise because credit will get tighter, too tight for the govt's printing press to handle the load by themselves and companies will have to go to the customers for extra help with the money they need for borrowing and that will happen through a rise in price of the products and services they sell.

    So even if you are lucky to get settlement in cash for your gold/silver promise. The cash will be worthless as the value of the currency will be worthless.

    So i guess I answered my own question. The spot price will rise high for a short time then crash low and stay low.

  7. Anonymous says:

    Ebay isn't a paper market for gold/silver. You get physical goods. You have no idea Numonic what you're talking about...

    Ed in CA

  8. stibot says:

    Ed, you have no idea what Numonic is writting about. Please don't waste our time and keep away with your comments. :-)

  9. john says:

    Numonic,

    So you say in time our US Dollars will be worthless & physical gold/silver worth less. My thoughts: Yes, US Dollars will be worthless, but since China, India & the rest of the world still invest in the physical metals market, i hardly think the spot price will crash and stay low. If the Yuan becomes the World Reserve Currency & they also begin to store most of the physical market, maybe they will control spot price.

  10. Anonymous says:

    Numonic,

    Brilliant. Really brilliant. Thank you.

  11. Numonic says:

    "john said...
    Numonic,

    So you say in time our US Dollars will be worthless & physical gold/silver worth less. My thoughts: Yes, US Dollars will be worthless, but since China, India & the rest of the world still invest in the physical metals market, i hardly think the spot price will crash and stay low. If the Yuan becomes the World Reserve Currency & they also begin to store most of the physical market, maybe they will control spot price.
    "

    I never said the price of physical gold/silver will drop, i said the spot price will drop. The spot price is the paper promise price and not the physical metal price. The spot price is debt and debt will be worthless when credit collapses. Physical things will be worth more in a credit collapse.

    And Ed in CA, Ebay is also a debt market, you should expect the bids of gold/silver on Ebay to be cheaper than what the coin shops are selling them for as there is more risk in ordering by mail than there is going to a coin shop and buying the gold/silver in person.

  12. shellykane says:

    Oh! Wow, It is really a wonderful article to read. I am so impress to read this one. So, guess they'll wait until the gold reaches sandcastle central before launching the revolution.. Thanks again guys...
    ============================
    gold for cash

  13. Basit says:

    Very nice and interesting article and I was really not aware of this information before.
    http://www.bayut.com

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