Kaloti Jewellery Group: MEED Assessment

09 April 2013

Kaloti is self-financed and has no debts

Kaloti says its total turnover in 2012 from gold trading was $32bn. This is 25-30 per cent higher than the previous year and accounts for about 40 per cent of all the gold bullion handled in Dubai.

Kaloti is self-financed and has no debts. Its cash reserves allow the firm to finance mining operations across the world, without having to own the mines.

The group’s expansion plans in Dubai, Suriname and its new trading offices reflect its faith in the long-term prospects for gold bullion, the company’s main business line.

Given the precarious state of the global economy, gold’s position as an investment and hedge against inflation and currency fluctuations has been reinforced. Central banks remain active buyers of gold and are forecast to buy about 425 tonnes in 2013, with the majority from lenders in emerging markets. These represent Kaloti’s major customers. Analysts are forecasting increased demand and prices for gold, based on ongoing high commodity prices and the weak US dollar.

According to the UK-based World Gold Council, gold demand by value reached an all-time record of $236.4bn in 2012. Gold jewellery demand by volume, however, fell 3 per cent in 2012 to 1,908 tonnes, primarily due to a relatively weak year in India.

Togetherm China and India account for more than 56 per cent of global demand for jewellery. Despite the drop in volumes, the value of jewellery demand reached a record of $102.4bn in 2012 as consumers continued to allocate greater sums to gold jewellery.

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