Statement on Dubai Gold Securities
Dubai, 2 February, 2010
Securities Holders will be aware that on 22 December 2009, the DFM announced its planned acquisition of the NASDAQ Dubai. The Press Release announced the consolidation of key market operations functions of the DFM and NASDAQ Dubai.
The current process for creation and redemption of the Dubai Gold Securities is on a T+3 delivery versus payment basis. As a result of this acquisition and the planned consolidation of trading, clearing, settlement and custody processes between NASDAQ Dubai and the DFM, the Directors of DGS LLP are considering whether any necessary steps are required to address any proposed changes in the current operational structure of the NASDAQ Dubai. To address this issue, the Directors of DGS LLP have appointed a sub-committee which will be reviewing any changes proposed and liaising with service providers and advisers to DGS LLP in relation to any steps which need to be taken.
A further announcement on any actions required by the DGS LLP Board and DGS LLP shall be made in due course.
Key Info
| Name | Dubai Gold Securities |
|---|---|
| Objective | A Shariah compliant investment designed to track the price of gold bullion |
| Exchange | NASDAQ Dubai – priced in US$ |
| Pricing | Based on approximately 1/10th of an ounce of gold |
| Expenses | 0.40% p.a. |
| Minimum Order Size | 1 security |
| The Gold Bullion | All gold is kept in Allocated Form |
| Custodian | HSBC Bank USA, N.A. |
| Marketing Agent | Dubai Commodity Asset Management DMCC |
| Margin Eligible | Yes |
| Structure | An equity security issued by DGS LLP |
| Shariah Compliant | Yes |
Advantages
| Exchange -Traded | Dubai Gold Securities are traded on NASDAQ Dubai, a regulated stock exchange. |
|---|---|
| Accessible | Investors can purchase Dubai Gold Securities through traditional brokerage accounts – allowing gold to be mixed with traditional asset classes such as stocks and bonds in an investment portfolio. |
| Liquid | In addition to trading on an exchange, Dubai Gold Securities can be created and redeemed by Approved Applicants (as defined in the Offering Document) on an ongoing basis. Therefore, the underlying liquidity will be determined by the gold market which is a 24 hour global Over-the-Counter (OTC) market. |
| Cost Effective | For many investors, costs associated with buying and selling Dubai Gold Securities are expected to be less than the costs associated with buying, selling, storing and insuring gold bullion in a traditional allocated gold bullion account. See 'How to Invest' for exact fees and charges. |
| Transparent | Dubai Gold Securities are backed by 400 ounce London good delivery gold bars. Net Asset Value and other relevant financial information are calculated daily, and posted on the website under Financial Information. The gold bars backing each and every Dubai Gold Securities can be seen on the Gold Bar Holdings page. |
| Premiums/Discounts | Should be limited - The ongoing ability of Approved Applicants to create and redeem securities (by exchanging gold for Dubai Gold Securities and vice versa) should limit potential premiums and discounts. |
| Low Counter-Party Risk | The gold backing each Dubai Gold Securities is held in the form of individually identified bars in an allocated account with the Custodian which holds the bars on behalf of investors. The Custodian may not trade, lease or lend the bars. |
| Storage & Insurance | Storage costs are covered by the Custodian, or any designated subcustodian. All storage and related expenses are covered by the expense fee. |
| Shariah Compliance | Dubai Gold Securities are a Shariah compliant investment, and a highly regarded international Shariah Supervisory Board oversees all operations, methodologies, and contracts related to the securities and their trading. |
Product Structure
Dubai Gold Securities are exchange traded securities of nominal value which carry with them an entitlement to approximately 1/10th of one fine troy ounce of gold bullion. For each Dubai Gold Security in issue there is a corresponding amount of gold held in the vaults of the Custodian.
Allocated Gold
Gold bullion held by the Custodian on behalf of Dubai Gold Securities investors will be held in the form of Allocated Gold.
Allocated Accounts
All gold held on behalf of investors of Dubai Gold Securities is held in allocated form.
Allocated accounts are held by the Custodian or any subcustodian in the name of DGS LLP and consist of uniquely identifiable bars of gold "allocated" to DGS LLP, which holds them as bare trustee for each investor. The gold held in the account is physically segregated from other metal held in the vault. Metal in an allocated account does not form part of the Custodian's assets. Allocated gold is not lent out.
Unallocated Accounts
Most gold traded in the London market is traded and settled in unallocated form. Gold held in this form does not confer on the investor any interest in the underlying gold and the investor only ranks as an unsecured creditor. Unallocated gold may be lent out to third parties.
