The gold market

Gold gained 480% in 10 years

Gold can be a star performer for investors in 2012, just as falling imports of the metal into India undermine the trade in Dubai, a leading precious metals expert says.

Arab News,

23 March, 2012

Jeffrey Rhodes, Global head of Precious Metals and CEO, INTL Commodities, Dubai Multi Commodities Centre (DMCC), predicts that gold prices will threaten to reach $2,000 per ounce this year, but ultimately fall just short of the mark.

Rhodes, who has been involved in the international precious metals business since 1978, took part in a panel debate today on the future of the US Dollar, BRIC (Brazil, Russia, India, China), and commodities, at the 51st ACI Financial Markets World Congress in Dubai.

He sees present weakness across the precious metals sector, and a strong track record in performances over the last ten years, as factors combining to present good buying opportunities.

Analyzing the potential for investment in precious metals this year, Rhodes said that while gold has gained by 5.43 percent from the end of 2011 to its current price of around $1,650, this is well off the high of $1790 posted at the end of February.

"I remain cautiously bullish for 2012 as a whole and see the current weakness across the precious metals sector as a buying opportunity," he said. "In a world devoid of yield, money managers need to invest in asset classes that will give capital gains, and moreover they need to point to track record when explaining their investment strategies to their investors.

"Gold is the star performer in global markets, gaining 480 percent over the last ten years, posting an increase in the annual price in each of those years with an average annual return of 20 percent per annum.

"While some would argue that gold is simply a counter currency investment to the USD, the fact is that gold has performed well in a wide range of currencies. During the period 2001 to 2011 gold rose by 273 percent in euros, 280 percent in yen, 353 percent in yuan, and 436 percent in Indian rupees.

"Silver has been even more impressive with the average price in 2011 almost 600 percent above 2001 with an annual average return of 23 percent per annum over those ten years. Platinum and palladium rose by an annual average of 14 percent p.a. and 10 percent p.a. respectively over the same period."

"We expect a high for gold in 2012 of $1,975. I think that gold can be such a tease that it will get everyone excited about a price north of $2,000 only to let us down. Our suggested low is $1,465 with an average price for 2012 of $1,727," added Rhodes.

He said the projected high for silver this year is $50.25, with a low of $22.25 and an average price of $36.25. Platinum is expected to reach a high of $1,940 with a low of $1,305 and an average price of $1,735 for the year. Palladium is projected to reach a high of $920, a low of $565 and an average price of $765.

Rhodes said: "The prospects for the gold trade in Dubai, as a proxy for the Middle East, are very much tied to the outlook for physical gold demand in India. Following the recent actions by the Indian Government to raise import duties, imports of gold into India are this year expected to be sharply down on 2011, which will impact Dubai's gold trade."

Taking place at the Dubai International Convention and Exhibition Centre, the 51st ACI Financial World Congress which concludes today is held under the patronage of Sheikh Hamdan bin Rashid Al-Maktoum, deputy ruler of Dubai and Minister of Finance.

Rhodes felt completely "at home" as an expert panelist at the Congress, which is appearing in Dubai for the first time. "For many years, although I was a leading gold market maker, the banks I worked with in the 1970's, 80's and 90's regarded the precious metals trading desks as part of treasury and so I was always registered as a member of the ACI," he explained. "So being involved this week is a bit like coming home".

The two-day congress is hosted by the UAE Financial Markets Association, which was established in December 2011, and is an affiliation of the Association Cambiste Internationale (ACI), the global umbrella body of the national financial markets associations around the world.

Founded in Paris in 1955, the ACI has more than 20,000 members in 80 countries, making it the largest international association in the wholesale financial markets industry.

The ACI Financial Markets World Congress is supported by the UAE Central Bank, Official Banking Partner Emirates NBD, gold sponsor UBS, silver sponsor National Bank of Fujairah, strategic partner Dubai International Financial Centre (DIFC) and Official Media Partner, Bloomberg.