An Oft-Overlooked Source Of Physical Demand: The Middle East

Peter Cooper points out that, although attention is focused on Asian physical demand, Arabian physical demand was the one of the drivers for the 1970s gold bull market. Less attention is paid to this part of the world because of a greater tradition of financial privacy, which means that many sales are unrecorded.

In November 2008 ArabianMoney reported on a record $3.5 billion purchase of gold by Saudi Arabian investors. Many of these gold deals go unreported and are metal deals between individuals, often of very substantial size.

Rumors of gold hoards buried in the Arabian desert may not be so wide of the mark. But the scope for con-men to hone such stories into believable investment opportunities is legendary and due diligence is called for in any such transaction.

What certainly seems to have happened among the super-rich of Arabia is that gold has become very popular as a safe haven asset without third party risk. In the wake of global banking and investment crises and scandals the absence of a third party is particularly desirable.

He end with the possibility that gold is being accumulated in the Middle East once again.


There's no way to find out definitively, of course, but it does fill a gap between reported gold demand and what real demand is likely to be given the current longer-term trading range. Some may be put off by the Arabian denizens' concern over financial privacy, but some others may find it refreshing.