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Gulf Cooperation Council to create new currency

JANUARY 01, 2009 – COMMENTS (0) | RELATED TICKERS: UUP , GLD

The breaking of their dollar pegs by the Gulf Arab nations is clearly dollar negative. Any inclusion of gold either as a part of the monetary basket, or in the reserves of the new GCC Central Bank will create additional demand for the precious metal.

From http://seekingalpha.com/article/112731-will-the-new-gcc-s......:

Gulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided.

Golden opportunity

GCC assistant secretary-general Mohammad Al Mazroui told Gulf News: ‘We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank’.

The creation of the GCC single currency - likely to be known as the Khaleeji which means Gulf in Arabic - is a major gold event for two reasons.

First, the breaking of their dollar pegs by the Gulf Arab nations is clearly dollar negative. Secondly, any inclusion of gold either as a part of the monetary basket, or in the reserves of the new GCC Central Bank will create additional demand for the precious metal.

2009 deadline

The project is gathering pace, and no lesser a figure than Saudi Arabia’s King Abdullah has directed that GCC economic integration committees speed up their work and complete the whole exercise by September 2009.

It is only a couple of months since a group of Saudi businessmen allegedly bought $3.5 billion worth of gold, believed to be the largest ever single transaction for the precious metal. Perhaps in 2009 it will be gold rather than local currencies which become of interest to speculators about monetary reform in the GCC.

Gulf countries are keen to break away from the link with the US dollar because it ties them to inappropriate monetary policies that exaggerate the boom-to-bust cycle in their economies.

Peter J Cooper is a freelance financial journalist based in the Dubai Media City, and a former partner in the Middle East’s best-read English language website http://www.ameinfo.com. He is also a columnist forhttp://www.business24-7.ae/cs the new UAE business newspaper.

With more than two decades of business journalism and a specialist knowledge of Middle East business and finance, he offers a different perspective on investment from an Arabian viewpoint.

Mr. Cooper spent a decade in London as a business journalist specializing in construction and real estate from 1984-95, and then moved to Dubai as the launch editor of Gulf Business, the first-ever business magazine in the Gulf. He is also the author of ‘Building Relationships: The History of Bovis 1885-2000′.

As an investor Mr. Cooper has made only a few significant moves: buying Docklands property in 1993 and selling out in 1998; starting a dot-com company in Dubai in 2000 which later merged with AME Info; and being an early buyer of Dubai property in 2002. He is currently invested in gold and precious metals.

Mr. Cooper holds a master's of arts degree in politics, philosophy and economics from Trinity College, Oxford University, and studied French at institutes in Tour and La Rochelle before becoming an administrative trainee in the European Commission in Brussels where he specialized in development economics.

Peter J Cooper is a freelance financial journalist based in the Dubai Media City, and a former partner in the Middle East’s best-read English language website http://www.ameinfo.com. He is also a columnist forhttp://www.business24-7.ae/cs the new UAE business newspaper.

With more than two decades of business journalism and a specialist knowledge of Middle East business and finance, he offers a different perspective on investment from an Arabian viewpoint.

Mr. Cooper spent a decade in London as a business journalist specializing in construction and real estate from 1984-95, and then moved to Dubai as the launch editor of Gulf Business, the first-ever business magazine in the Gulf. He is also the author of ‘Building Relationships: The History of Bovis 1885-2000′.

As an investor Mr. Cooper has made only a few significant moves: buying Docklands property in 1993 and selling out in 1998; starting a dot-com company in Dubai in 2000 which later merged with AME Info; and being an early buyer of Dubai property in 2002. He is currently invested in gold and precious metals.

Mr. Cooper holds a master's of arts degree in politics, philosophy and economics from Trinity College, Oxford University, and studied French at institutes in Tour and La Rochelle before becoming an administrative trainee in the European Commission in Brussels where he specialized in development economics.

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