Gold a new headache for Thai central bank as baht surges

By Orathai Sriring, Satawasin Staporncharnchai

 

FILE PHOTO: Thailand's Central Bank Governor Veerathai Santiprabhob speaks during an interview with Reuters at the Bank of Thailand in Bangkok, Thailand, October 4, 2019. REUTERS/Matthew Tostevin/File Photo

 

BANGKOK (Reuters) - After surging gold shipments helped push Thailand’s baht to a 6-year-high, dealers in the yellow metal voiced doubt on Friday at the central bank’s hopes of getting them to bring back their export proceeds more slowly.

 

The baht THB=TH is Asia's best performing currency this year, firming more than 7% against the U.S. dollar, and putting further pressure on the export-reliant economy.

 

Thailand produces very little gold and the flow is driven by trading. Shipments in August accounted for 7.4% of Thailand’s overall exports.

 

Bank of Thailand Governor Veerathai Santiprabhob said on Thursday that rules would not be imposed on gold trading, but he urged gold traders to keep funds overseas for longer.

 

“There were quite huge gold flows, which added to appreciation pressure on the baht,” he said.

 

The biggest factors buoying the baht have been a hefty current account surplus and foreign fund inflows to a currency seen as a relative safe haven.

 

Gold dealers said exports had spiked because Thais who bought gold in the past were taking advantage of a recent rise in global prices XAU= to above $1,550 an ounce.

 

Gold traders recently met the Bank of Thailand to discuss the situation, said Kritcharat Hiranyasiri, president of MTS Gold group. But he said it was unrealistic to expect gold investors to keep their proceeds abroad for longer.

 

“Gold investors want cash, so there is no fund parking,” he said, adding that the central bank should find other measures to curb fund inflows.

 

Despite the recent spike in exports, Thailand has still imported a net $43.6 billion of gold since 2009 - although that includes imports for use in jewelry and religious items in the largely Buddhist country as well as by gold traders.

 

(GRAPHIC: Thailand's net gold exports - here)

 

The central bank governor told Reuters that many Thais had bought gold when prices were even higher in the hope it would appreciate further.

 

“This is unique about Thailand. Thai people have invested a lot in gold, and whenever gold prices go up globally, they would sell the gold that they had bought earlier,” Veerathai said.

 

That also means that those selling gold are often small players who want to get their money immediately via dealers who also cannot afford to wait repatriate proceeds of exports.

 

“As we don’t hedge, when clients sell a lot of gold, we have to export that, and inevitably bring in the money,” said Pichaya Phisuthikul, vice president of Gold Traders Association.

 

-- © Copyright Reuters 2019-10-11

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as a vast number of Thai families have gold as their pension savings, its all good news for them. The CB can go hang as far as many Thais are concerned. 

To much gold headache.

To strong baht headache.

too good for its own good headache.

 

So much headache.

 

https://www.bloomberg.com/opinion/articles/2019-10-10/even-the-imf-says-thailand-can-cut-rates-to-stimulate-the-economy

 

 

 

Didn't this same thing happen during the last coup?  A country that keeps making the same mistakes over and over again. 

So the small people are taking their profits. Can't have that. 

29 minutes ago, yellowboat said:

Didn't this same thing happen during the last coup?  A country that keeps making the same mistakes over and over again. 

Don't you understand yet, that ???????? has never, will never make, and cannot make any mistakes ????

13 hours ago, snoop1130 said:

Thailand produces very little gold and the flow is driven by trading. Shipments in August accounted for 7.4% of Thailand’s overall exports.

Does that mean percentage of exports is growing as everything else is contracting  ?

Let us hope the price of gold crashes!

16 hours ago, snoop1130 said:

Thailand produces very little gold

Hard to produce when red tape exists to open up new potential areas,, and unnecessary closure of  a working profitable  gold mine.

Thailand produces very little gold since PM Prayut dispossessed Kingsgate of Thailand's only working mine using Article 44.

Gold is one of Thailand's biggest imports and likewise one of it's biggest exports. All they do is bring it in, trade it and/or convert it into another form like jewellery and export it. That is why monthly import/export values are artificially inflated by gold.

Contrived export figures are meaningless and hide the true dismal picture of exports. In February the the export figures included the repatriated value of all the American military equipment used in Operation Cobra Gold when it was returned to the States.

Anything to make the numbers look good for world consumption. In truth the fools are only fooling themselves.

15 minutes ago, Cadbury said:

Thailand produces very little gold since PM Prayut dispossessed Kingsgate of Thailand's only working mine using Article 44.

well...

 it certainly won't affect the quality in his Table Service  

       

Edited October 12, 20196 yr by tifino

5 hours ago, RichardColeman said:

Does that mean percentage of exports is growing as everything else is contracting  ?

The percentage of gold exports ... yes.

• "The value of merchandise exports expanded by 3.8 per cent from the same period last year, which was the first positive growth in 8 months. However, the value of merchandise exports excluding gold continued to contract at 1.7 per cent." (2019-08-30) https://www.nationthailand.com/business/30375624

19 hours ago, snoop1130 said:

the central bank’s hopes of getting them to bring back their export proceeds more slowly.

With the "hot" baht I'd convert the export proceeds into foreign equities as a hedge against a potential Thailand recession.

2 hours ago, Burma Bill said:

Let us hope the price of gold crashes!

I very much doubt that. It will fluctuate no doubt, but not crash. As the financial markets have learnt nothing from 2008, The global financial structure is still deeply flawed, so precious metals and minerals will always be a safe haven for many, especially in Asia. 

5 hours ago, Burma Bill said:

Let us hope the price of gold crashes!

You wish.

 

Fact is that now we "need" so much gold (and other expensive metals) already in producing things as smartphones, tablets and other high end products and fact that world wide more and more of these things are being sold they predict that the gold supply can be finished in about 20-30y.

 

So as long the peoples, companies and banks not sell their gold supplies and/or they not use other less expensive and rare metals in those products prices will go only up.

11 minutes ago, Foexie said:

You wish.

 

Fact is that now we "need" so much gold (and other expensive metals) already in producing things as smartphones, tablets and other high end products and fact that world wide more and more of these things are being sold they predict that the gold supply can be finished in about 20-30y.

 

So as long the peoples, companies and banks not sell their gold supplies and/or they not use other less expensive and rare metals in those products prices will go only up.

The fact is that gold, diamond (carbon), etc. are one of the most common element in the universe. We are probably safe for our lifetime but if we don't self-destroy it will probably not be rare in the future: https://www.theguardian.com/science/2019/may/12/protect-solar-system-space-mining-gold-rush-say-scientists

He's surprised that when gold prices rise, people sell that was purchased at lower prices? Duh!

On 10/11/2019 at 6:39 PM, snoop1130 said:

FILE PHOTO: Thailand's Central Bank Governor Veerathai Santiprabhob speaks during an interview with Reuters at the Bank of Thailand in Bangkok,

The look on his face says it all !

On 10/12/2019 at 7:43 AM, Tayaout said:

So the small people are taking their profits. Can't have that. 

Governments globally bad mouth gold to their citizens while loading up on it themselves.

 

Follow the money, not the propaganda

all <deleted>..

 

thailand is at the moment NOT PRODUCING GOLD ( last mine akara closed as of order of prayut, court case open under FTA 10.11 in hongkong)

 

as Thai not produce..they import and they export , so only the value adding counts for the diffrence,speculants are minor and not relevant , and balance  ,is low

Curency speculants, asian investment funds, and weak other SAE goverments , and low goverment depts ,and Prayut ( he stays for safe)  are the reasons why currency strong

 

and as far

YEAR ON YEAR !!!  ( until sept !!)

PRECIOUS METAL EXPORTS  MINUS 7,4% Y o Y

4.9.1029

Year-over-year, the fastest-growing product categories were exported organic chemicals (up 31%), mineral fuels including oil (up 28.2%), then plastics and plastic items (up 14.3%).
Two product categories declined, namely gems and precious metals category (down -7,4%) and rubber including articles made from rubber (down -4.7%).

 

www.worldtopexports.com

Edited October 13, 20196 yr by lapamita