Lessons from Dubai
The eruption of the Iran war introduced extreme uncertainty and disruption in multiple industries all over the world. However, the shock experienced by the Gulf countries that Iran targeted in retaliation to the attacks in its own territory by the US and Israel was significantly more severe.
This article was taken from BFI Bullion’s recent newsletter, the Digger. To read the latest Digger in its entirety, click here.
The UAE, and Dubai in particular, once hailed as the playground of the rich and famous and as a haven of stability, safety and luxury for wealthy expats and entrepreneurs turned into a war zone overnight, with missiles falling from the sky and sirens warning citizens to take shelter multiple times a day. Flights were cancelled leaving many stranded in the small country. Countless residents trying to flee to safety found it extremely difficult to find a way out. Even if they managed to get themselves out, taking their life savings with them was another challenge of its own, especially if those savings were in physical gold.
In March, conflict-driven flight cancellations across the Middle East severely constrained air cargo, leaving physical bullion stuck in Dubai, one of the world’s key gold trading hubs. As a result, gold in Dubai began trading at a $10–$30 per ounce discount to London prices, not because of any change in its intrinsic value, but purely due to logistical bottlenecks and an inability to move the metal from where the massive supply was, due to people trying to sell and flee the country, to where the demand was.
This episode highlighted a critical but often overlooked fact: gold is only as liquid as the infrastructure that supports it. The physical gold trade depends heavily on secure, functioning transport routes and when those routes are disrupted, markets fragment. Dubai, typically a conduit linking suppliers and refiners to global demand centers like Switzerland, Hong Kong, and India, quickly became isolated. With flights operating at a fraction of normal capacity and shipments constrained, local oversupply emerged while other markets remained relatively unaffected.
At BFI Bullion, we have repeatedly emphasized to our clients and readers that the decision to hold gold is as important as the decision of where and how you store it, because all of the protections that the metal affords are merely theoretical if you cannot access it or sell it when you need to. In other words, jurisdictional quality matters as much as asset quality. The Dubai example demonstrates that this is a very practical risk, that can emerge with little to no warning. While it is impossible to guarantee that Switzerland will never go through any kind of harsh crisis scenario or that it will never face geopolitical challenges or outright conflict threats like the ones we are now seeing in the Middle East, we can safely say it is highly unlikely; or at least a lot more unlikely than anywhere else in the world.
The small alpine nation stands apart because it combines political neutrality, stable infrastructure, and its role as one of the world’s primary gold refining and storage hubs. Even during global crises, Switzerland remains deeply integrated into the international bullion market, with established logistics, legal clarity, and proximity to major financial centers. In contrast to transit hubs like Dubai, where gold may depend on uninterrupted global flows, Swiss-stored gold is positioned at the core of the system, not its periphery. Equally important is the choice of storage provider, which is why it is essential for investors to do their due diligence before selecting a partner. Reputable, time-tested companies with established market relationships can ensure that gold can be mobilized or sold at fair value even in dislocated conditions.
Read the entire BFI Bullion Digger here.
