The Dubai Multi Commodities Centre (DMCC) has been inundated with inquiries from banks and wealthy investors seeking to move their bullion to the high security vaults beneath the free zone following a move by Swiss banks to raise fees for gold storage.
Executives from the DMCC and Brink's, the international security company that operates the vaults, both confirmed that there had been a marked increase in gold stored and inquiries from new customers in recent months.
It is understood that UBS and Credit Suisse, the Swiss banks that lead the gold storage market in their home country, are in the process of raising gold vaulting fees because of increased costs imposed by the Basel III banking regulations. The regulations came into effect on January 1 and will be phased in until 2019.
Gold that is unallocated, or held on a bank's balance sheet as an asset, has traditionally held a book value of 50 per cent of its market value. Under the Basel III regulations, however, such unallocated gold becomes a so-called Tier One asset to be valued at 100 per cent.
It therefore costs twice as much to keep unallocated gold on a bank's balance sheet under Basel III.
So-called allocated gold belongs to a client of the bank and does not have to be accounted for in the same way.
UBS acknowledged that the new regulations would increase the cost of keeping gold on a bank's balance sheet but declined to comment further. Credit Suisse declined to comment.
"In Switzerland a lot of the gold that is held is actually unallocated gold. That is, it actually forms part of the balance sheet of that bank," said Gautam Sashittal, the chief operating officer of DMCC.
"And what has happened over there is that in the past this unallocated gold was cheap for banks to keep. Gold could be lent out to gold producers so that they could hedge their future production. That was a big market for banks. But today producers are not hedging."
What is more, Mr Sashittal added, hedge funds and gold funds are more often long gold, meaning they are invested because they think it will rise in value, which has further depressed the market for lending the precious metal.
Because of this shift in valuations and pricing, banks and high net worth investors are increasingly looking to Dubai to lower their costs of gold storage.
"There is a lot more transit gold coming into to the DMCC vaults recently," said Mr Sashittal.
Michel Constain, the general manager for Brink's in Dubai that operates the DMCC vaults agreed.
"We witnessed solid growth throughout the region during 2012 from both new and existing customers," he said.
Typically vaulting fees will be between 0.05 per cent to 0.1 per cent of the value of the gold, plus value added tax (VAT), said Mr Sashittal.
"Now I mention VAT as that can go as high as 25 per cent depending on your jurisdiction. The key factor to remember here is Dubai doesn't have VAT, so automatically you have that difference." VAT is levied at 8 per cent in Switzerland.
The gold vaults beneath the DMCC at Jumeirah Lakes Towers are five storeys underground and one storey below sea level.
To access them customers must endure a lengthy and elaborate security procedure, passing through several electronic security gates and descending an unknown number of floors in two elevators.
The gold is stored in a large vault alongside ingots of silver, cages filled with bags of jewels and cabinets of expensive watches.
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Important questions to consider
1. Where on the plane does my pet travel?
There are different types of travel available for pets:
- Manifest cargo
- Excess luggage in the hold
- Excess luggage in the cabin
Each option is safe. The feasibility of each option is based on the size and breed of your pet, the airline they are traveling on and country they are travelling to.
2. What is the difference between my pet traveling as manifest cargo or as excess luggage?
If traveling as manifest cargo, your pet is traveling in the front hold of the plane and can travel with or without you being on the same plane. The cost of your pets travel is based on volumetric weight, in other words, the size of their travel crate.
If traveling as excess luggage, your pet will be in the rear hold of the plane and must be traveling under the ticket of a human passenger. The cost of your pets travel is based on the actual (combined) weight of your pet in their crate.
3. What happens when my pet arrives in the country they are traveling to?
As soon as the flight arrives, your pet will be taken from the plane straight to the airport terminal.
If your pet is traveling as excess luggage, they will taken to the oversized luggage area in the arrival hall. Once you clear passport control, you will be able to collect them at the same time as your normal luggage. As you exit the airport via the ‘something to declare’ customs channel you will be asked to present your pets travel paperwork to the customs official and / or the vet on duty.
If your pet is traveling as manifest cargo, they will be taken to the Animal Reception Centre. There, their documentation will be reviewed by the staff of the ARC to ensure all is in order. At the same time, relevant customs formalities will be completed by staff based at the arriving airport.
4. How long does the travel paperwork and other travel preparations take?
This depends entirely on the location that your pet is traveling to. Your pet relocation compnay will provide you with an accurate timeline of how long the relevant preparations will take and at what point in the process the various steps must be taken.
In some cases they can get your pet ‘travel ready’ in a few days. In others it can be up to six months or more.
5. What vaccinations does my pet need to travel?
Regardless of where your pet is traveling, they will need certain vaccinations. The exact vaccinations they need are entirely dependent on the location they are traveling to. The one vaccination that is mandatory for every country your pet may travel to is a rabies vaccination.
Other vaccinations may also be necessary. These will be advised to you as relevant. In every situation, it is essential to keep your vaccinations current and to not miss a due date, even by one day. To do so could severely hinder your pets travel plans.
Source: Pawsome Pets UAE
The End of Loneliness
Benedict Wells
Translated from the German by Charlotte Collins
Sceptre
Directed by Sam Mendes
Starring Dean-Charles Chapman, George MacKay, Daniel Mays
4.5/5
