By Will McSheehy and Glen Carey
April 7 (Bloomberg) — Dubai Multi Commodities Centre, a tax-free business park in the United Arab Emirates, plans to start a venture with the World Gold Council to trade the first Islamic securities backed by gold bullion.
Through a joint venture called Dubai Gold Investments, the partners plan to create Dubai Gold Shares and list them on the Dubai International Financial Exchange Ltd., they told reporters at a briefing in Dubai today.
Dubai Gold Shares will comply with Islamic Shariah law, WGC Chief Executive Officer James Burton said at the briefing. The shares will allow holders to gain from advances in the price of gold without having to insure, store and move the metal, he said.
The venture follows exchange-traded gold securities started by the WGC on nine other exchanges including bourses in London, New York, Singapore and Paris. Those securities held gold worth $24.2 billion at the end of March, according to notes distributed at the briefing.
Each Dubai Gold Share will represent 0.1 ounce of gold held in custody by the center and HSBC Holdings Plc, according to Burton. Scholars of Islamic law employed by Shariah Capital Inc. will ensure the securities comply with Islamic principles.
Gold for immediate delivery rose $5.15, or 0.6 percent, to $918.95 an ounce as of 11:26 a.m. in London. The metal has gained 10 percent this year.
Dubai started the commodities center in 2002 in a bid to develop its non-oil economy, providing a physical market for traders in gold, diamonds, energy and tea.