Investing in gold is like saving money for the future. However, the difference is, instead of putting it in a bank, you buy gold online. In the UAE, one of the most popular and safe ways among people is to invest in gold because it is a safe and smart way to keep their money secure.
However, how do you begin if you want to start investing in gold? This guide will explain how you can invest in gold, why it is a good idea, and the best ways to do it, especially through trusted platforms. So, let’s begin by understanding ‘what is investing in gold’?
What is Investing in Gold in UAE?
Investing in gold means buying gold with the hope that its value will go up over time, plain and simple. You can invest in gold in different forms, like gold bars, bars, or even digitally through the internet. Let’s look at five types of gold investments with practical examples to make them easy to understand.
1. Physical Gold
Physical gold means buying actual gold bars or bars that you can hold in your hand and keep in a safe place. For example, let’s say you live in Dubai and want to save money for the future. You decide to buy a gold bar from Kanak House Bullion. You visit their website, buy a 24k gold bar, and take it home. Now you can keep the gold bar in a safe box at home. You can feel happy knowing you have real gold that can be sold anytime you need money.
2. Gold Savings Plans
A gold savings plan lets you save a small amount of money each month to buy gold over time. For example, KHB’s gold saving scheme is simple and flexible. Here’s how it works.
You can subscribe to receive a gold bar every month for 12 months. You can choose from different amounts: 1 gram, 2.5 grams, 5 grams, 10 grams, or more. What’s the best part? You lock in the price of gold in the first month and pay the same price for the entire year, even if the market price of gold goes up or worse, even if the market price goes down.
4 Steps: How Does It Work?
- Choose Your Plan: Decide how much gold you want each month. For example, you might choose to get 1 gram of gold every month.
- Lock the Price: The price of gold is locked in during the first month. This means even if gold prices rise, you still pay the same amount each month.
- Monthly Payment: Pay the same amount each month for 12 months.
- Receive Your Gold: Kanak House Bullion delivers the gold bar to your home every month.
The key benefits are:
- You lock in the price from the first month, protecting against price increases
- You can save gold gradually without a large upfront investment
- You receive the physical gold bars each month to build your savings
This simplified example shows how a gold savings plan works even when gold prices decline or increase. It highlights the importance of understanding market fluctuations when deciding to save gold systematically over time.
So by joining the KHB’s Gold Savings Plan, a UAE resident can systematically accumulate gold at a fixed price, without being impacted by the market fluctuations in the price of gold. This makes it an easy and convenient way to save gold over time.
3. Gold ETFs and Mutual Funds
Gold ETFs (Exchange-Traded Funds) and mutual funds let you invest in gold without having to store it yourself. You buy shares of a fund that owns gold.
For example, let’s say you want to invest in gold but don’t want to keep it at home. You can buy shares of a gold ETF through your bank. The ETF owns a lot of gold, and your shares represent a part of that gold. As the price of gold goes up, the value of your shares goes up too. You can sell your shares anytime and get cash without ever touching physical gold.
4. Digital Gold
Digital gold is buying gold online and storing it digitally.
For example, let’s say you love using your smartphone for everything. You decide to buy digital gold through an online app or website. You buy a small amount of gold online, and the company stores it safely for you. The best part is that you can check your gold balance anytime on your phone. Whenever you want, you can even sell the digital gold or even convert it to physical gold and have it delivered to your home.
5. Gold Mining Stocks
Gold mining stocks mean buying shares in companies that mine gold. Let’s say you’re interested in the stock market. You buy shares of a gold mining company through your brokerage account. The company digs gold out of the ground and sells it. If the company does well and the price of gold goes up, your shares increase in value. You can even sell your shares for a profit or keep them for long-term gains.
Gold Bars vs Gold Jewelry, Which One Is A Better Investment Option?
Purity: Gold bars are very pure but jewelry has other metals mixed in it. For example, if you buy a 1 gram gold bar for an assumed price of AED 296.75, it’s almost all pure gold. However, if you spend the same amount on gold jewelry, you only get about 0.75 grams of pure gold.
Making Cost: Also, the making cost of Gold bars is less compared to jewelry and they are easier to sell for a good price. Jewelry usually costs more because of its design and making charges. Other than this, jewelry is also harder to sell for a good price.
Selling Price: As per our assumed price, selling a gold bar can help you get a price which is quite close to AED 296.75. However, selling gold jewelry might only get you around AED 200, plus it takes more time to sell it.
Quantity: Other than these advantages pertaining to Gold bars, they also come in exact weights. Hence, you can buy the exact quantity you want.
Bottomline is that Gold bars are the better option in terms of investment because you get more gold for your money, you can sell them easily, and buy them in exact amounts. Jewelry is nice to wear and can have sentimental value, but it may not be the best option in terms of long term investment.
Why You Should Invest in Gold as a UAE Resident
Investing In Gold Offers Stability and Security
Gold is very stable. This means its value does not change a lot, and it stays valuable even when other things lose value.
For example, during the 2008 financial crisis, the value of gold went up because people trusted it more than money. During the 2008 financial crisis, the global economy faced severe turmoil. As stock markets crashed, investors turned to gold as a safe haven. In the UAE, the price of gold per gram rose significantly.
For instance, in early 2008, the price of gold was around AED 150 per gram. By the end of 2008, as the crisis deepened, the price surged to approximately AED 200 per gram. This increase demonstrates how gold retained and even increased its value when other investments faltered
Gold Has Great Cultural Significance
In the UAE, gold is a part of many traditions. People often give gold as gifts during weddings and festivals, so it’s a familiar and trusted investment.
For example, the UAE is one of the largest consumers of gold worldwide. According to the World Gold Council, gold demand in the UAE has consistently remained strong, driven by cultural practices and investment needs. In 2022, the UAE’s gold jewelry demand was reported to be around 27 tons, reflecting the ongoing cultural affinity for gold.
Events such as the Dubai International Jewelry Week showcase the significance of gold in Emirati culture. This annual event attracts global participants and highlights the craftsmanship and cultural heritage associated with gold jewelry in the region
Gold Has Proven Historical Record
Gold Price in 2000: In the year 2000, the price of gold was approximately AED 1,050 per ounce. This price reflects the market conditions at the time, where gold was seen as a stable investment but not yet at the heights it would reach in the following decades.
Gold Price in 2020: By January 2020, the price of gold had risen to around AED 1,897.50 per 10 grams, which translates to approximately AED 6,000 per ounce (since 1 ounce is approximately 31.1 grams). This increase highlights the significant appreciation in gold’s value over two decades, confirming the trend of gold as a reliable investment option during economic fluctuations.
Here’s a summarized comparison of gold prices in the UAE from 2000 to 2020:
| Year | Price per Ounce (AED) |
| 2000 | 1,050 |
| 2020 | 6,000 |
Benefits of Investing in Gold in UAE
No. 1 Gold Helps Protect Your Money from Rising Prices
Inflation means prices for things go up. Gold usually keeps its value even when prices for other things increase, so it protects your money from losing value.
Example: Imagine you have AED 1,000 saved up in a jar. You can buy a lot of things with that money today. But over time, prices go up, and that AED 1,000 doesn’t buy as much. It’s like your money is shrinking.
Now, think about your friend Zainab, who used her AED 1,000 to buy a small gold bar. When prices go up, the value of Zainab’s gold bars also goes up. So while your money in the jar buys less, Zainab’s gold bars still hold its value. This way, gold helps protect her money from losing value.
No. 2 Gold Is Much Easier To Sell Making It A Very Liquid Asset
Gold is easy to sell. This means you can quickly turn it into cash anywhere in the world.
Example: Let’s say you need some cash quickly because you have an emergency. You have a gold bracelet that your grandmother gave you. You take the gold bracelet to a jewelry store, and they give you cash for it right away. It’s fast and easy. Now, think about your friend Omar who has a fancy painting. He needs cash too, but it takes him a long time to find someone who wants to buy the painting. Gold is much easier to sell quickly, making it a very liquid asset.
No. 3 Gold Helps In Diversification Of Your Investment Portfolio
Diversification means having different kinds of investments to reduce risk. If you invest in gold, it can help balance other investments like stocks and bonds.
Example: Imagine you have all your money invested in a lemonade stand. One summer, it rains a lot, and you don’t sell much lemonade, so you lose money. Your friend Aisha, however, has money in a lemonade stand, a cookie shop, and a small gold bar. When it rains, her lemonade stand doesn’t do well, but her cookie shop may not do well too but her gold bar keeps its value. Aisha doesn’t lose as much money because her investments are diversified. Gold helps balance her other investments and reduces her risk.
Best Types of Gold Investments in UAE with Examples
Physical Gold (bars)
Buying gold bars and bars is a simple and popular way to invest. You can buy them from places like Kanak House Bullion, which ensures you get pure and certified gold.
Example: Imagine you have some pocket money and want to save it safely. Instead of keeping it under your bed, you decide to buy a small gold bar. You go to a shop like Kanak House Bullion, where you find shiny gold bars and bars. You choose gold bars because they’re small and easy to keep.
Now, think of the gold bars as a special kind of savings. When you buy it from Kanak House Bullion, you know it’s real gold because they provide a certificate proving its purity. Over time, these gold bars can become worth more, and you can sell it if you need cash. It’s like having a treasure that grows in value.
Gold Savings Plans
Kanak House Bullion offers a Gold Savings Plan where you can invest a small amount each month. Over time, you can accumulate gold bars that are delivered to you.
Example: Let’s say you want to save up for a big treat, but you can’t afford to buy gold all at once. Kanak House Bullion has a Gold Savings Plan that lets you save a little bit each month.
For instance, you decide to put AED 100 into the Gold Savings Plan every month. Each month, Kanak House Bullion uses your money to buy small pieces of gold for you. After 12 months, you’ll have saved enough to get a gold bar delivered to your home. It’s like putting a little bit of your pocket money away each month to build up a nice gold collection without needing to spend a lot all at once.
Gold ETFs and Mutual Funds
These funds let you invest in gold without having to store it. You can buy shares of these funds through the stock market. For example, Gold ETFs and mutual funds let you invest in gold without having to keep physical gold at home. Here’s how they work:
- Gold ETFs: These are like tiny pieces of gold you can buy and sell on the stock market. Each unit usually equals 1 gram of gold. You can see the price of gold change in real time. Buying and selling Gold ETFs costs a small fee, about 0.5% to 1%, and it’s as easy as trading stocks. In conclusion, you can buy at a lower price, observe the market price rise and sell, gaining your profit in the process.
- Gold Mutual Funds: These funds put money into gold ETFs or companies that mine and produce gold. You can start with small amounts, like 500 AED, and invest regularly through Systematic Investment Plans (SIPs).
Making Money from Gold Price Changes
One big advantage of Gold ETFs is that you can take advantage of changes in gold prices. Here’s how:
- Market Trading: You can buy and sell Gold ETFs anytime the stock market is open. If you think gold prices will go up, buy shares when prices are low and sell them when prices are high to make a profit.
- Short Selling: If you think gold prices will drop, you can sell Gold ETFs you don’t own yet (borrow them) at the current price. Later, when the price is lower, you buy them back cheaper, and you keep the difference as profit.
- Hedging: Gold ETFs can protect your investments when the economy is shaky. If you think the market might go down, you can buy more Gold ETFs to balance out potential losses in other investments.
So, gold ETFs and mutual funds make it easy to invest in gold without needing to store it physically. You can trade these funds on the stock market, which means you can make money from price changes. This makes Gold ETFs a good choice if you want to actively manage your investments and take advantage of price changes.
Digital Gold
You can buy gold online and store it digitally. This is convenient and easy, especially for those who prefer online transactions.
Gold Mining Stocks
Buying shares in gold mining companies can be profitable. When the price of gold goes up, the value of these shares often increases too.
How to Invest in Gold in UAE
Step-by-Step Guide
Here’s a step-by-step guide on how to invest in gold in the UAE, including the importance of gold insurance:
- Research and Choose a Method: Decide if you want to invest in physical gold (bars or jewelry), savings plans, ETFs (Exchange Traded Funds), digital gold, or mining stocks. Each method has its own benefits and risks.
- Select a Reputable Vendor: Make sure to buy from trusted dealers like Kanak House Bullion or well-known banks and financial institutions. This ensures you receive authentic gold and fair pricing.
- Understand Pricing and Fees: Know the current price of gold and any extra costs involved in your investment. This includes premiums for physical gold, management fees for ETFs, or transaction fees for mutual funds.
- Complete the Purchase: Follow the steps to buy gold, whether online or in a store. For physical gold, ensure you receive proper documentation and a receipt.
- Secure Your Investment: If you buy physical gold, keep it in a safe place, such as a bank safety deposit box or a secure home safe. For digital or ETF investments, track them regularly to monitor performance.
- Consider Gold Insurance: Insuring your gold investment is crucial, especially for physical gold. Gold insurance protects against theft, loss, or damage, ensuring that your investment is safeguarded. Check with insurance providers for policies specifically covering precious metals.
By following these steps and considering gold insurance, you can make informed decisions about investing in gold in the UAE, protecting your investment while capitalizing on the benefits of this precious metal.
Why Choose Kanak House Bullion for Gold Investments
Kanak House Bullion offers many services like selling gold bars and bars, gold savings plans, and checking gold purity with assay reports.
Benefits of Investing with Kanak House Bullion
- Competitive Prices: They offer better prices than many other dealers.
- Certified Gold: Their gold is 999.9% pure and internationally certified.
- Convenient Payment Options: You can pay with cash, online, or in-person.
- Secure Delivery: They deliver insured gold to your doorstep within the UAE.
- Buyback Option: After completing a 12-month plan, you can sell back the gold at the same price, even if the market price of gold at that particular time is less.
While other dealers may offer similar services, Kanak House Bullion provides comprehensive plans, competitive pricing, and excellent customer service, making it a great choice.
