For average investors who are looking to cash in on gold, it won't hurt to invest in the UAE's first bullion coin which is scheduled to be distributed this month.
According to Rolf Schneebeli, CEO of Gold Services AG, coins represent an excellent way to invest in physical gold for the average investor, as they allow anyone to own a protection directly rather than through a bank or a paper gold approach.
"The coins will be priced at the gold price, plus a percentage as making charges. The price of the coins will therefore move in line with the gold price and will appreciate over time," Schneebeli told Gulf News.
The Dubai Multi-Commodities Centre (DMCC) confirmed that the coin will be marketed through jewellery stores, souvenir outlets, banks and other financial institutions across the UAE.
The coin will bear the portrait of President His Highness Shaikh Khalifa Bin Zayed Al Nahyan on one side, and on the other the Burj Khalifa, the world's tallest tower.
How to get a premium
However, would-be buyers should be aware that prices can vary between dealers, and in order to get a premium on the precious metal, they should know where to shop. Schneebeli said a good trick to get the coins at fair market prices is to head to the Gold Souq.
"To get a fair deal on the purchase or sale of a coin, there is nothing like a visit to the Gold Souq. You compare the price in a few shops next to each other and buy from the one offering the best deal," he advised.
Just like the Visions of Dubai gold coin series, the new coin will be denominated in ounces and will be available in the following sizes: one ounce, half-ounce, quarter-ounce and one-tenth ounce.
Each coin will contain specified weights of fine gold. The one-ounce coin will have 31.103 grams, while the half-ounce coin will contain 15.552 grams. The gold content for the quarter-ounce coin will be 7.776 grams and for one-tenth ounce, 3.110 grams.
"Distribution in the UAE is only a first step. The DMCC must ensure a wide distribution across the region and the world to ensure wide recognition of the coin," Schneebeli said.
What to watch out for when buying coins
If you're a first-time gold coin investor, here are a few tips to keep in mind from Gold Bars Worldwide:
- Choose a reputable dealer that buys and sells gold coins at competitive prices.
- Check the current gold price.Calculate the percentage premium (mark-up) of the coin above the current value of the coin's fine gold content. When you buy bullion coins from a dealer, the price will include the costs of refining, coin manufacture, delivery of the coin to the dealer and dealer overheads.
- Calculate the "spread" or the difference between the purchase and sell-back price of the coin.
- Find out the storage costs, if you're to store the coins somewhere.
- Check the delivery and insurance cost, if applicable.