The Cork Board

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Abu Dhabi Islamic Bank launches capital-protected silver notes with potentially huge upside

Peter Cooper | November 5, 2013

Abu Dhabi Islamic Bank, a top-tier UAE Islamic financial institution, has launched new capital-protected silver notes to allow customers to invest in a metal that analysts believe may soon see a price rebound.

The Shari’a-compliant notes, which mature in two years, provide 100 per cent capital protection at maturity to minimize risk. The notes are currently open for subscription with a minimum amount of $30,000.

Huge silver upside

Unlike gold, which is regarded as an inflation hedge and a safe haven in an uncertain economic environment, silver is extensively used in industrial production, which accounts for 46 per cent of total demand for the metal.

Improvement in the global economy should bode well for the silver price, which technical analysts believe has reached a strong support level at $19.77 per ounce, following a 33 per cent fall in the last year.

Silver also tends to have a high correlation with gold, which has seen a price rebound recently. The ArabianMoney investment newsletter (subscribe here) is tipping silver as a way to leverage gold this month. New subscribers will get the current edition free and immediately.

ADIB’s structured notes have been well received by investors, particularly three capital-protected gold notes and two capital-protected oil notes that matured at the beginning of this year.

The one-year gold note produced a total return of 15 per cent, while slightly lower-risk notes returned four per cent and six per cent. One of the two-year oil notes gave a 17.9 per cent return, with the other produced a 1.2 per cent return.

Precious metals to rebound

In a world where money printing is the name of the game for global central banks it is only a matter of time, and probably not much at that, before the traditional money that cannot be printed soars in value.

Chinese buyers have been piling into gold and silver this year, taking advantage of the dollar-defensive manipulation of the Federal Reserve to stock up and diversify away from US treasuries at low prices for gold and silver. T-bonds are not wanted in Asia. The Fed is buying up most of them itself while artificially manipulating gold and silver prices to support the dollar.

That suits Asia just fine as the Fed is effectively subsidizing the cost of gold and silver that Asian buyers want to replace their US treasury bonds. This ADIB silver investment instrument is gold dust.

http://www.silverseek.com/commentary/abu-dhabi-islamic-bank-launches-capital-protected-silver-notes-potentially-huge-upside-12