By Peter Cooper
Pop down to the Old Gold Souk in Deira, part of the modern city of Dubai and the hottest selling item is a 1kg bar of silver these days. Ejaz Ilyas, director of Karachi Jewellers said in an interview, they are selling 600 to 700 of these $1,300 bars each month with a 4.1 per cent profit margin.
Silver is more profitable than gold
‘It is far more profitable to trade silver than gold where the margin is much smaller,’ said Ejaz Ilyas.
‘We get a lot of passing tourists who buy 1kg silver bars. I was born in Dubai and spent most of my professional life in London but business is better here now. Even a modest shop in this souk does well.’
Not far from the Old Gold Souk is the ultra-modern terminus for cruise liners. Almost a million passengers visited Dubai last year and many find their way to the famous Dubai gold souks where gold and silver are sold untaxed. The only country in Europe not to charge tax on silver is Estonia. Cruise ships also call in there too.
In the Old Gold Souk the customers come from all over the world. Chinese and Russian buyers are prominent though Arab buyers from the Gulf Cooperation Council countries are probably still the biggest spenders. This is the month of the famous Dubai Shopping Festival so the gold souks are particularly busy.
Ilyas said he thought the price of silver would be $58-60 by September, a spectacular gain on the price of $32 an ounce on Monday. His reasoning is that the shift from paper money to real assets will benefit silver more than gold.
‘Metal prices are always volatile,’ he cautioned. ‘However, you can see where people are putting their money now.’
Eurozone money printing
There is also a school of thought in the souk that reckons the outcome of the eurozone crisis will be more money printing by the ECB whatever happens to Greece, and that this will propel dollar-denominated silver and gold to much higher prices.
Of course there is always the liklihood of a short-term set back for silver in a big market sell-off. The shiniest of metals is off to a good start with the price up 13 per cent since the New Year, comfortably outperforming any other investment class.
Source: Silverseek
