1 – PURPOSE
The sole purpose of offering physical precious metals to the ARB clients is to increase the product offerings to its client, which in turn will increase the profitability and the bottom line of the bank. It has been established that Gold and Silver retailers, who are among ARB corporate clientele, usually buy USD from ARB and use the funds to acquire their precious metals from ANCB. Hence, herein lies the market basis of the proposed offering for the precious metals. Currently, ANCB is the only organization in the financial trade market that deals in the trade of precious metals and ARB envisions it to be its only competitor. ARB will limit itself to the corporate clients, who buy on a continuous and regular. Seasonal request to buy either gold or silver by private and affluent clients will not be accommodated.

2 – EXECUTIVE SUMMARY
3 – INTRODUCTION
Precious metals have been traded for eons. Fairly common are gold and silver which apart from their ornamental value, they have a variety of industrial and commercial uses. Among these precious metals, gold has been chosen as a special interest metal. Gold is a precious metal that a whole industry has developed and evolves into a multibillion-dollar industry led by huge corporations. The gold industry is stratified with many major and minor players working together. Key among these relevant stakeholders includes the mining companies, the gold processing companies, gold traders, and consumers.
Gold mining is one of the most intensive, which is carried out extensively around the world. The World Gold Council (WGC), a market development organization, puts the production of gold globally to be in the region of 3,000 Metric tons. The figure produced globally does not meet the quantity demanded. The low supply and high cost of setting up a mine prohibits the possibility of gold reducing in price.
The key areas of focus of the new precious metal division of the ARB will be to offer the clients of precious metals affordable rates that are lower than what the competition offers them. At the same time, deliver on authenticity and quality. The ARB Treasury will be the sole custodians of such precious metal and thus bear extra risks with minimal risks to the bank.
Background
-The Process involved in Gold acquisition
-Permits
-method and mode of sale to clients
-Hiring of new managers and new staff
-Legal issues involved by a bank selling precious metals
-Research pertaining the involvement of banks in sale of precious metals
-Any market research done by ARB
Business Objective
The business objective for the new precious metal offering to the ARB clients is to improve and gain on profitability. As such, the revenue streams for the precious metal business must always be more than the overhead costs. In order to realize profitability as a business objective, the management will work together with all the other stakeholders to control costs involving operations and production with the view of maintaining a healthy profit margin. Moreover, the management has to conduct a comprehensive competitive analysis so that the new arm of ARB understands where its products will be ranked in the marketplace.

Industry Outlook
The industry outlook of the bullion market in the Kingdom of Saudi Arabia is made up of manufacturers, distributors, and the bottom of the industry comprising retailers and traders. It is important to notice that some large commercial banks operating within the Kingdom offer banking products that are based on gold. However, there is an absence of a centralized exchange for gold trading. Two key gold trading centers include Riyadh and Mecca. Sale of gold is normally high however; it peaks during celebrations such as Hajj pilgrimage, Ramadan, and during wedding periods. Hajj pilgrimage offers the best time for sale of gold since pilgrims come from all over the world visit Mecca.
The WGC in 2014 estimated the number of individuals who partook in the Saudi gold market to be about 7500 traders. In addition, the activities of the traders and retailers yielded approximately USD 8 billion. The amount of money traded by the retailers in 2014 represented a tenth of the wholesale gold market in Dubai. Furthermore, the wholesalers who are located in Dubai often supply other markets in the region apart from those they supply the Kingdom. WGC has figures of gold demanded in the Kingdom relative to its neighbors. For instance, in the year 2015, Saudi Arabia demanded a total of 85 tons of gold jewelry, investment bars, and coins, compared to the UAE, which averaged 60 tons of the gold jewelry, investment bars, and coins. The major exporter of gold in the same year was Switzerland. It exported a total of 46 tons of gold into the Kingdom.
Though the amount of gold imported into the Kingdom is significantly larger than those of its neighbors, the competitiveness of the Kingdom’s gold cannot match those of its neighbors. Of key concern to the gold market players is the 5% levy charged on imported manufactured gold. While on the hand, Dubai for instance charges only 0.5% levy on the same. Furthermore, Dubai does not have stringent visa requirements as compared to those of the Kingdom. Hence, many foreign direct investments are lost in the Kingdom due to the restrictive visa requirements.

Competitive Environment
The Kingdom of Saudi Arabia has an established gold mining sector. Most importantly, the mining sector contributes immensely to the national economy although it is quite small when it is compared to the global gold industry trends and statistics. In the Kingdom, a state controlled company is exploring and developing its gold resources. MA ‘Aden, the state controlled company, produced a total of 5.1 tons.

Another manufacturer is the Riyadh based L’azurde. A company is recognized as the largest manufacturer in the Middle East and the Kingdom in the gold jewelry industry. The company has spread its operation to Egypt, North Africa, where it is a major distributor. In addition, L’azurde established a refinery in Riyadh, which has the accreditation of the London Billion market Association. In addition to L’azurde, Al-Moallim is another important player in the lucrative luxurious gold jewelry sector.
Apart from the gold manufacturers, some Saudi banks also offer gold products. The National Commercial Bank issues its customers gold accounts, which they will able to trade in gold. Another bank, which offers gold, accounts for holding and is the Arab National Bank.
Profitability
The demand and hence profitability of the gold trade in Saudi Arabia closely rely on socio economic factors, global price and the physical buyers. However the interests that have been shown by both the manufactures and the retailer’s points out to a profitable environment. However, small retailers are being edged out while the manufacturers are setting up and operating their own retail outlets.
Regulatory
The gold trading in the Kingdom of Saudi Arabia is closely monitored and regulated. The Saudi Arabian Monetary Agency (SAMA) is the sole body that manages the gold reserves of the Kingdom. In addition to the regulation set by SAMA, there exists a Precious Metal Chamber, which represents the interests of the Saudi gold industry.

Product Rationale
Gold is a long term investment for our customers and we believe that bullion trading for us will remain a profitable venture for us. The trends currently point out to a high gold price presently and in the future. * In our opinion, the demand outlook for gold is good for the traders. The risk of inflation in the long-term is appreciated. Hence, the demand will be strong as it makes gold a strong investment in the coming future. The amount of bullion demanded by the corporate clients will be higher when the volatility in prices do down. * The current low supply of mined gold as compared to previous years is supportive of higher prices. The supply of above ground stocks of gold cannot match the increased demand that has been brought by the higher gold prices. Hence, we feel that the increasement in demand for gold will continue pushing gold prices, hence giving us a lucrative position as traders of bullion in bulk. * During the past decade, some of the key corporate clients like the central banks of numerous countries have been the net source of supply in the bullion trading market. The central banks are bulk holders of gold. However, there is a major shift in behavior by the central banks. For instance, the central banks have turned into large source of demand for gold. The impact of such a drastic change in demand offers us an opportunity to position ourselves as major players in the trading of gold. * Currently, we hold on to the belief that although the prices of gold are high, the true value of gold is still understated. When the value of gold is understated, corporate and some private investors take the position of buying and hoarding the metal. It is our understanding that this situation is currently happening as clients are currently buying and taking the golf of the market.

Key Benefits to Customers
According to the Saudi Arabian Law, a bank may sell precious metals to the customer in any amounts. The ARB bank focus will be on corporate clients. The key benefits to customers who will make gold purchases from ARB include: * For every purchase of bullion made under the ARB, the bank will issue a quality certificate that shows the authenticity and quality of the bullion * ARB bank has the relevant storage facilities for gold. In the event that the clients want the bank to store/hold their gold, the service will be readily available for safe keeping * ARB bank in its fleet has specially amoured vehicles and professional staff who are well versed in the handling and transportation of high value products. Hence, gold purchased from the bank will be safely, securely, and conveniently transported by the bank from its vault to the customers preffered location. * The purchase of gold and other precious metals offered by the bank will be confidential. Any transaction made between the bank and its clients wll be private, and as such, the clients will benefit from the privacy offered by the bank. * ARB would offer its client the possibilities of effecting payment by the use of bullions in other countries. * Moreover, due to the high liquidity of bullion, the bank will ensure that its customers get a twenty-four round the clock access to their bullions. Hence, they would be able to trade online at a touch of a button or secure a loan through with them.

Product Description
In its basic state, gold is a commodity. The intrinsic value place on gold is what sets its apart from the other precious metals. The demand for gold far outstrips supply. Gold has to be mned from the deep bowels of the earth. The process of mining is often timng consuming and an expensive affair. However, previously mned gold which had been used for various products is often resmelted and is known as above ground gold. The presence of these two sources of gold still does not effectively meet the bulging demand. The need to step into the demand driven gold market is thus a well thought move for the bank.

Product features
Gold is coveted by humans and it is the best metal used in making jewelry. It is a rare metal with a distinctive yellow color