More than 20 per cent of the world's physical gold passes through Dubai at some point in its life. Gautam Sashittal, the chief operating officer of the Dubai Multi Commodities Centre, has seen it all.
What is all this gold doing in Dubai?
Dubai has always been known as the city of gold in the jewellery market, but what we have done is we have dropped in the bullion market. The gold banks are here, the gold traders are here, so you've got the depth and breadth in the market. You've got everyone from gold refiners to gold aggregators to traders to jewellery makers. That's what creates a marketplace and that's what makes Dubai the perfect gold market place. Dubai is built on trade, on commodities and that's what we do, we were set up to increase the commodities trade flow through Dubai. And we have the only unique commodities infrastructure in the world.
What does DMCC do with gold other than storing it in a big vault?
Vaulting is just one of the pieces of the market. At DMCC we have created an entire infrastructure. We have created the Au Gold Tower the Almas Diamond Tower and the Ag Silver Tower. We have created all the products and services that are required. There are two gold refineries operating from the JLT free zone. In the next two to three years we will have another two or three refineries operating here. Lots of scrap gold is melted here, it is refined and it goes back into markets like India.
How do you know the gold you deal with is the real McCoy?
We've created the Dubai Good Delivery Standard Kilo Bar, so buyers can buy with confidence from Dubai good delivery standard seller. That is the only good delivery standard globally and 20 refineries in 13 countries are accredited with this DGD standard. And this is the only gold that is allowed to be traded in the DMCC or on the DGCX.
How can you trade at the DMCC at present?
Gold futures is perhaps the most popular method. Producers, traders and investors can actually hedge their risk or invest in gold futures on the DGCX, so that is another important aspect of the gold market at the DMCC. Then DGCX hopes to launch the spot gold contract this year. We also have Trade Flow, that's a financial product based on precious metals stored here, it's a warranting system. We have commodity Murabaha that we launched last year. We have Sharia-compliant hedge funds. A gold hedge fund and an energy hedge fund. The gold hedge fund is run by Tocqueville Asset Management and the energy hedge fund is run by BlackRock. We were the first ones to launch a gold sukuk to build these towers, so we are front-runners in Islamic finance.
What type of regulation do you provide?
Regulation comes firstly through the Dubai good delivery standard. Also, through what we are doing with conflict minerals, in terms of responsible supply chain management of gold. We've issued practical guidelines for managing responsible supply chain management of gold. We've got further ahead now so that we have actually developed protocol where all refineries are required to be audited by one of the big four firms. In June of this year all of the refineries that are DMCC certified will be able to say they are managing their supply chains responsibly.