Due to its strategic position connecting the eastern and western worlds, Dubai is an age-old traditional trading market in the Middle East region. Dubai's heritage souks are well-known for trading in many items, including spices, pearls, textiles and traditional homewares. Also, Dubai is a market for many precious metals, such as gold, silver and diamonds. Dubai is popularly known as the 'City of Gold' because of the flourishing industry involved in the trading of the precious yellow metal.
Investing in any product or financial instrument in the global market scenario could lead to uncertainty in your business. Investors look for secure investments which, when investing in a commodity, provide guaranteed returns on the investment. Investing in the gold industry is one such asset that has attracted investors. Investing in Dubai's gold sector is effortless and safe.
If you are a budding businessman who sees the gold industry or a well-settled businessman who wants to grow his business, then your chance is to set up a place in the Dubai gold market.
In the 1940s, the gold industry in Dubai began to flourish due to free trade policies that attracted traders from all over the nation to base themselves here.
The trade-in gold and diamonds today is one of Dubai's leading imports. Imports in the non-oil segment were dominated by gold in the first quarter of 2016. Gold imports worth Dh 24.4 billion or about 15 percent of total non-oil trade.
The Dubai Gold Souk has become a popular and popular destination for gold buyers, also a checklist item for travellers exploring the streets of Dubai. The Gold Souk is a famous gold market located in the heart of Deira's commercial district. It is home to some 300 retailers specialising exclusively in jewellery.
It has been said that up to 10 tonnes of gold are present in the gold souk at any given time! It demonstrates the potential of Dubai's gold business set-up. The demand for gold comes from nations such as India, Iran, etc., and shoppers flock to Dubai from all over the world to buy the enchanting piece of jewellery.
Dubai is the city of gold and still one of the key hubs for trade operations, popularly known for its rich history. Dubai's gold investment company is a lucrative way to earn healthy returns for investors. It gives investors who are willing to make healthy returns on their investments in various opportunities. Let us understand why investing in Dubai's gold sector is beneficial.
City of Gold
One of Dubai's most lucrative industries is gold investing. The industry contributes about 20 per cent to the UAE's GDP, where Dubai adds the share of lions. More than 4,000 companies directly engaged in different trades around the precious metal constitute the lively group. In the gold and diamond sector, there are thousands of investors.
Gold is seen by many individuals, regardless of cultures, both as an investment and defence. It is available in the form of coins, bars, bullions and jewellery for trading. The various carats available for trading-gold of 24k, 22k, 21k and 18k. Gold retail transactions entail different costs: the weight of gold, quality fee, wastage charges where applicable and VAT tax.
Purpose of Investing in Gold Sector in Dubai
Investors interested in starting a business in gold-related business operations can explore opportunities in the following sectors.
Procurement and Exchange
There are no commercial gold mines in Dubai and, in large part, its partner Emirates. The African and Latin American nations received much of the gold. Companies also adopted the 'ethical sourcing' method that prohibits the purchase of metal from conflict-affected and high-risk areas that fund illegal activities. The policy on ethical sourcing has already been implemented by DGCG and MCC free zone businesses.
More businesses are signing up for certification that accountably / ethically confirms the bullion used. Gold accounts for a more significant proportion of products imported into the UAE, which in 2014 accounted for about 14 percent of total imports.
There are many companies involved in the gold refining and technology sector. They include both domestic and foreign companies that import the gold themselves or from different traders in Dubai. Businesses are using all the latest technologies to improve their capabilities and increase process efficiencies. The gold goods produced and assembled, which include many wholesalers, distributors and gold retailers, will pass through the chain.
Investments and Funding
Gold is one of the world's great tools for investment. While most of the retail gold is sold in physical form, with the use of foolproof means, there are several possibilities in recent years to invest in electronic goods. The government has created the Dubai Multi Commodities Centre (DMCC) free zone to provide market infrastructure for global trade in commodities. DMCC organisations, such as the Dubai Gold Delivery Standard (DGD) and the Dubai Gold & Commodities Exchange (DGCE), provide retail and institutional investors with facilities and financial products.
Advantages of Investing in Gold Business in Dubai
Companies are making investments in the gold sector that benefit from a variety of government and industry benefits.
VAT on Gold
Dubai is one of the famous segments for buying gold. Tourists, immigrants and locals never let the chance to buy the yellow metal go anywhere. At comparatively lower prices in Dubai, gold ornaments and jewellery are available. A VAT reverses charge system is in effect, according to which registered dealers do not charge VAT when selling certain goods to another registered dealer as long as the latter plans to resell/produce them. However, at a flat rate of 5 per cent of the gross value, retail consumers are paid VAT.
There are several markets where gold, diamonds and other precious metals are traded for the lead. In either free zones or mainland Dubai, companies can choose to start the business. The advantages differ between the zones in which the organisation operates. DMCC and Dubai Gold & Diamond free zones offer a wide range of benefits including tax exemptions on imports & exports, no company and income taxes, 100 percent repatriation of funds, as well as consumer protection, ambience, Hallmarking and shuttle transportation. Companies like Dubai Gold Souk, which is a conventional gold market, operate from the mainland to deliver other advantages.
Gold is a common item for decorating. As a symbol of prosperity and prestige, the locals consider gold. The use of lavish lifestyles is symbolised in several respects. Expatriates from various countries employed and saving money are the other primary local customers in Dubai. Indian sub-continent citizens form an essential part of the expatriate culture, and gold historically plays a central role in all sub-continent people's ceremonies, making them a perfect consumer. These advantages, along with low taxes, have generated a lot of demand for gold companies in the local market. Also, both locals and expatriates use their savings to invest in financial goods made from gold.
Tourists are flocking to Dubai from all over the world to spend their holidays. For visitors, Dubai offers many great experiences and adventures. Because of the number of shopping options on offer in more than 40 malls in Dubai, Dubai is known as a shopper's paradise. The Dubai Gold Souk is a popular tourist destination with splendid displays of artistic abilities that appreciate gold crafts.
There has been a spike in visitors from Asian countries who have been very keen on shopping for gold jewellery in the last few years. A large number of gold retailers, a selection of gold jewellery craftworks and tax and other advantages have made Dubai a hot shopping destination for gold.
Dubai World Expo 2020
Dubai is organising world expo 2020 from October 2020 and will host the 2020 World Expo in October 2020. It is predicted that this event will raise the sales and incomes of all economic sectors. After deducing the effects of the global event and the aftermath, several UAE-based retailers have announced plans to expand their operations before the event.
Investing in gold gives investors a low-risk threshold the perfect opportunity, as gold metal is one of the best investment opportunities in an uncertain economic climate. In the Dubai forex market, it also plays a very crucial position in the portfolio.
Protection against Risk
One of the world's most trusted commodities is gold. Many investors tend to invest in precious metals as protection against economic uncertainty during the global financial crisis. It is rightly said that gold prices do fluctuate, but investors can invest in gold to protect against inflation when adequately leveraged.
In Dubai, gold investments provide potentially high benefit and high liquidity. It is safer to gain higher gold investment returns to be a highly liquid asset. Because of the high gold liquidity, through knowing the trading techniques and watching the demand, an investor can sell it at any marketplace and gain good returns on the amounts invested.
Security against Depreciation
Gold protects against economic depreciation as well. Dubai's gold investment is also one of the safe and stable options that are simple without detailed study. In certain situations, as opposed to other financial assets such as bonds, stocks, etc., gold prices typically change in opposite directions.
All the required steps have been taken by the UAE to draw more attention from business freaks and foreign investors interested in starting a gold business in Dubai. At the initial point, continuing alone in an unfamiliar direction may be problematic and avoiding the same business investors plan to move forward with the advice given by business experts as they are informed of the mechanism of legal proceedings and business establishment.
A leading business consultant in Dubai, Commitbiz Consultants, serves to provide dedicated business incorporation services. We have helped multiple business investors start their businesses in the UAE, Qatar, Bahrain, Oman since the beginning. Our seasoned industry experts take the requisite steps to understand and adequately listen to your business needs.
At Commitbiz, we can assist our customers in establishing the gold trade sector. By offering the relevant legal knowledge and industry expertise, our specialist advisors have years of experience in loyally supporting our clients. To answer your questions, please contact us. We're happy to help you!