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Gold plays a key role in generating revenue and strengthening the UAE economy and holds a significant position in the Emirati economics. The richest and the most popular emirate, Dubai is also known as the city of gold due to the huge amount of gold and diamond ornaments that are sold regularly in Gold Souks of Deira.
Based on the statistics approximately 4000 companies are operating in the gold sector of UAE that generated total revenue of roughly AED 275 billion annually.
According to the DED (department of economic development), there are 4086 firms that are operating in the Dubai gold sector. The total foreign trade carried out by the UAE that forms a major chunk of the economic revenue sums up to AED 400 billion annually out of which the total import value equals to AED 142 billion whereas the total export via gold summed up AED 75 billion.
In order to understand the impact of gold on the economy of a nation as well as at the level of citizen, we’ll be breaking down and decoding the co-relation between both.
Gold is one of the safest modes of financial investment since times immemorial not just in the UAE but all across the globe. During phases of financial instability aka inflation when the prices of other commodities rise substantially along with a sudden dip in the value of a currency, gold still manages to maintain its value. People usually tend to stock funds in the form of gold due to its high liquidity and its ability to hedge against inflation.
The price of gold in a nation is a firm indicator of the health of an economy. Furthermore, financial institutions and reserve banks of the majority of nations stock gold to counter strokes of uncertainties in the form of inflation. Hence, it can be clearly said that gold holds an irreplaceable position in strengthening the economy of a nation.
There are numerous ways in which gold contributes to the Emirati economy. In fact, after oil, and tourism gold is one of those sectors of the country that generates maximum revenue. In this section, we’ll provide a detailed insight into the various forms through which gold generates revenue and contributes to the economy of the UAE on the national level as well as the individual level.
Gold mining is one of those sectors that provide significant sustainable socio-economic development to the economy of the nation. Gold mining not only generates revenue and contributes to the economy but also generates a plethora of job opportunities which helps citizens of a country to grow on an economic level. Gold mining brings in and develops infrastructure in the country which indirectly adds to the economy.
The gold mining industry in the UAE is small and is mainly due to limited reserves in the country. On the extrinsic level, China is one of the leading producers of gold on the global level.
Gold refining is one of those forms that have contributed extensively to the growth and development of the Emirati economy. Within the past few decades, the gold refining capacity of the nation has grown exponentially. The geographical location of the UAE is one of the major contributing factors that have led to the development of the gold refining sector in the country.
The country is located in the middle of the world which offers quick and easy accessibility to the eastern and western parts of the world. The annual gold refining capacity of UAE is a staggering 130 tonnes which makes it one of the leading producers of gold across the globe.
The gold manufacturing sector is another major revenue-generating form of the gold industry. The manufacturing industry employs thousands of emiratis as well as expatriates which contributes to the growth of the people indirectly contributing to the economy. Most of the jewelry being sold in the UAE is entirely handmade and is the true depiction of exquisite craftsmanship.
Gold standards came into existence somewhere around 640 B.C when the precious metal was mainly used to make coins, and the financial strength of an individual was determined by the amount of gold one had.
Gold standards refer to the process where a nation ties the value of their currency to the gold in with the primary objective of redeeming the currency for its value in the form of gold. The gold standards allow nations to save heavy gold bullions for trade by using the lightweight currency. Gold standards helped nations to counter inflation by stocking gold in their reserves and maintaining a balance between the gold and paper currency held by the nation.
In a Nutshell
It is clearly evident that gold plays an integral role in the growth, development, and strengthening of the Emirati economy. Furthermore, the cultural importance of god is another primary factor that has indirectly contributed to the growth of the economy via the gold industry.