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I though some might be interested in the metrics involved in buying gold in the market at Dubai.
I carry a spreadsheet when I make one of these forays which shows the value of gold, in terms of local currency in various karats of purity and various popular weight units (for example, gold is sold in Thailand by the baht and in China by the teal, but most places are now using grams). While there is always a markup, more palatable if the item is jewelry than a lump on the counter, it does tend to hold value better than other souvenirs like refrigerator magnets.

Dubai attracts the tourists for another reason - because it is the home of the world’s most popular gold market - the Gold Souk. The Gold Souk is located in Deira, Dubai near Baniyas Square. It is a huge gold market having almost 300 shops in narrow streets where the windows sparkle with the gold ornaments. Windows of each shop are jam-packed with gold rings, bangles, ear rings and necklaces (and for those who have a lot of taste – though not necessarily good taste – there are gold breastplates, helmets, wrist cuffs and assorted other doodads suitable for dowries or mistresses). There are an estimated 15 tons of gold displayed in the windows of shops. There are actually two gold markets, the old souk and the new souk. Both are in the same location and display same variety of jewelry. Most of the jewelry in this market is 24 karat or 22 karat. The trinkets come in different shades of pink, yellow, rose, white and purple gold. Most of the customers seem to be Indians who are buying dowry material while trying to beat the high taxes on gold sold in India.

While the prices can be competitive, they are not displayed because they fluctuate with the market. The daily gold prices are set by the UAE government and The National Bank of Dubai. The prices are based on weight (and not per piece as they would be in a department store in the western world). These prices are set regardless of the design of the jewelry (and they are about 5% above the wholesale buying price of the US commodity spot price). You should also check the jewelry carefully to make sure that there are no flaws or rough edges. Another thing that should be kept in mind is that you will have to bargain with the shopkeepers because, while the price of the gold is fixed, the price of the workmanship to turn it into the trinket you are holding is negotiable. You can also check the selected item from other shops to get better understand whether you are being offered a decent price. (The Iranian and Indian shopkeepers are as fluent in Russian as they are in English here). Of course you also have to keep an eye on the scale.

You can receive a slightly better price for cash than for Visa/Mastercard (but your eventual VAT refund will be in UAE currency). Given a bit of time and a few smiles, you can negotiate away most of the workmanship portion of the price. The 5%VAT tax can be recovered by showing the item and the appropriately prepared invoice, along with your passport, at the customs office at the airport or cruise port when you leave.

The gold souk is open from 10 am to 1 pm and it reopens from 4 pm to 10 pm. On Fridays, the market remains closed in morning and opens at 4PM in the afternoon. While the idea received a few heckles, the gold pricing spreadsheet I created actually came in very handy. My wife has a collection of 22K gold bangles from various countries we’ve visited and now has added one from Dubai (priced in UEA dirhams per gram and prorated to 22K).

As in other parts of Asia, to many, gold IS money, rather than its proxy,

While I suspect most shops are honest as they are heavily government supervised (silver shops are not and values for silver might be better elsewhere), I have had very good experiences at two of the Kanz Jewels branches in the Gold Souk (I think they have four there). They have been meticulous in their weighing, the gold has tested to the right karat, they are polite and willing to politely negotiate to a reasonable price.

So here’s how the pricing worked on December 6, 2019 in USD to simplify:

US Spot gold price (for reference): $1,465.60 per troy oz. or $47.12 per gram for 24k “pure” gold
Prorated or alloying, that’s $43.19 per gram for 22k gold

The “government” approved charge for 22k gold in Dubai is $45.16 per gram (the price 23k would normally cost) for a markup of 4.5% on the metal.

So a 19.85 gram (gold is sold by the 1/100th of a gram and meticulously weighed world-wide) 22k bangle would contain $896.43 in gold

The style of workmanship was significantly more ornate than a “plain” bangle and, after halving it through negotiation came to an additional $193 for workmanship and markup (or about 21.66%). This was my bow towards buying this a jewelry, rather than simply as currency. I figured that was reasonable as you should never expect to buy gold at below the vendor’s current replacement cost.

There was a 5% VAT tax applied on top which can be recouped (as a refund on your credit card or in UAE cash, if that is how it was paid (an important consideration), at the airport or cruise terminal. Make SURE that the paperwork given to you by the merchant includes the tax rebate QIC bar code sticker pasted on it. While the desk at the airport is manned 24 hours per day, the desk at the Rajid Cruise port is manned (womaned) from noon on at Terminal number 3. If your ship is at Terminal 2 (a smaller building about a mile away), you will have to either get security to request that the agent walk over (no port shuttle here) or you will have to trek to the other terminal and back (or wait for the last port before leaving the UAE if on a ship and hope it is easier there – might not be).

Jeff
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