Gerhard Schubert, Head-Commodities, Emirates NBD

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1) Paper products are popular in West but not in Middle East or Asia. What exactly are the reasons?
It is not people in the Middle East who do not like to trade in derivatives or in paper gold but the affinity to physical gold is very much stronger here than in so called potentially different American market or in very grown up European markets. Gold ETFs market has grown up tremendously in the West last ten years but that is not replicated here in Asia. But, we (at Emirates NBD) do have a product called ‘Gold Certificate’ which is a hybrid output of both, physical and paper. It is a product that is 100% backed by physical gold at all times here in Dubai and it is also can be named ‘paper’ because the customer can choose to redeem the certificate in either cash or he can take possession of physical bars at any given time. That is giving confidence to the customer that if he chooses to have the physical metal, he can collect it at any given time with a 2 days’ notice, i.e. the normal practice of trade+2days, or the same as the spot payment. In all branches of UAE this product is available. We also intend to introduce the same by next year in our branches in Saudi Arabia. But challenge is the ‘fineness’. Saudi is .999 market where is Dubai is .995 market.
2) As an investment banker in precious metals, are you ready to invest in refinery section?
Emirates NBD does not contemplate to have a Dubai refinery as an asset itself. There are very good refineries here from the private commercial sector for example- the Dubai Good Delivery status refineries like Emirates Gold, Kaloti and Al Etihad plus the other refineries around the world who also fulfill and have DGD status. So I do not think there is a point for Emirates NBD to have a refinery as an asset and to compete with these completely well organized and capitalized refineries.
3) What more should be done in the region to make this trade to be at 1500-2000 tons yearly? What Dubai is lacking here?
In 2011 the trade number was around 850 tons and it represents significantly more than 20% of the world’s physical gold trade which goes through Dubai. We should not forget that Dubai obviously is a logistic hub and it has first class logistics to supply the Indian market specifically and India is still the biggest official off taker. In order to grow substantially beyond this, the Dubai trading community and refining community will have to pay more attention to 9999 markets. 1kg bar DGD standard for 9999 quality would be in the interest of the DMCC to develop.
4) There is media report that so much conflict gold is coming into UAE. Is it a mechanized effort of the section of media to malign this market?

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