Investors starting to look at lower gold price as a buying opportunity

Dubai, May 31, 2012: Trust Securities DMCC, a Clearing Broker member of Dubai Gold and Commodities Exchange (DGCX), in an analytical study, said gold remains in a long term bull market for the investors. 

It said: "The recent decline in gold has some investors puzzled as the precious metal is supposed to be attractive when global economic uncertainty rises. During the debt crisis, investors turned to gold as a safe haven which helped propel it to a record high of around US$1920 in September 2011."

"More recently, gold has done a better job of tracking the equity markets and moving opposite the US dollar like other commodities. In late-February, gold rallied up to a high of $1790.60 per ounce and has since fallen as much as 14.5 per cent to around US$1526.9 per ounce this week. The decline off the record high has been a little over 20 per cent."

Mr. Bruce Powers, Head of Research at Trust Securities, said: "Lately, instead of jumping into gold for safety, investors have flocked to the US Dollar, US Treasuries and German Bonds. Recent downward pressure may have been amplified by investors liquidating gold to cover weak positions in the equity markets. However, even with the recent decline, gold remains in a long-term bull market."

He said the highly liquid gold futures market can be used as a mechanism to purchase physical gold. Investors can lock-in the purchase price of gold now through a futures contract, which offers the benefit of leverage, by depositing only a portion of the total value of gold they are purchasing. It's only when the physical gold is delivered to the investor that they pay the full value of their purchase.

Mr. Asim Khan, CEO, Trust Securities, said:  "Investors are starting to look at the lower gold price as a buying opportunity, either to re-enter the market or add to existing long-term positions. Some clients are even using gold futures as a method to purchase physical gold."

An investor buys a gold futures contract on the DGCX and then holds it through to the expiration date of the contract rather than closing the position prior to expiry.

The DGCX then delivers a 'Dubai Gold Receipt' under the Dubai Multi Commodities Centre's (DMCC) 'Global Multi Commodities Receipt' (GMR) platform, which verifies the quality and quantity of gold. An investor then takes delivery of physical gold which can be stored in an approved Dubai vault

Mr. Bruce added: "Our analysis indicates that there is a good chance that gold prices may be heading towards a bottom for now. As the European debt crisis continues to unfold with new concerns over Greece and now Spain, plus Moody's downgrade of Italy's banks, as well as a big trading loss surprise at JP Morgan, investors could once again see gold as a safe haven alternative."

Trust Securities has been leader in the commodity market in the United Arab Emirates for close to 10 years and has recently established two sub offices in India and Sri Lanka. Trust Securities is a clearing member of the Dubai Gold and Commodities Exchange, an initiative of the DMCC, Financial Technologies (India) Limited and the Multi Commodity Exchange of India Limited (MCX),   and a supply chain manager of Agricultural commodities throughout the Middle East and North Africa (MENA)  region.  

About Trust Securities:
Founded in 2005, Trust Securities is one of the first clearing members of the Dubai Gold & Commodities Exchange. Trust Securities is licensed by the Dubai Multi Commodities Center (DMCC) and regulated by the Emirates Securities & Commodities Authority (SCA). It is a privately held group owned by its management and employees. Headquartered in Dubai, it employs over 70 people in its global operations. Trust Securities provides investors with bespoke solutions to access commodities investments in a risk-adjusted environment to diversify their portfolio.  The underlying assets are secured by the largest exchange in the Middle East, DGCX, and cleared through the DCCC for increased security and transparency.

For further information, please contact: 
Trust Securities DMCC
1402/3 - Al-Reef Tower
Jumeirah Lake Towers (JLT)
Dubai, UAE
P.O. BOX 121690
Telephone: +9714-440 5902
Fax: +971 4440 5901
Email: info@tsecurities.com 
Website: www.tsecurities.com

© Press Release 2012