Gold Shops Call For Govt Help As Prices Soar

[george]

Gold shops call for govt help as prices soar

SATUN: -- Owners of gold shops today urged the government to take action over rising gold prices, complaining that all their customers were selling gold rather than purchasing it.

In the southern province of Satun, shopkeeper Mrs. Praphai Anudit said that the current price of gold – around Bt8,000 per baht weight – was crippling local gold shops.

While the shops were not without customers, most of them were bringing on gold to sell, and few were making any purchases.

She also blamed the heavy sale of gold on problems faced by local farmers and fishermen as a result of weather conditions and rising oil prices, which meant that few people had enough money to buy gold jewellery. Only the wedding trade remained relatively unaffected, she said.

Noting that gold shops faced high taxes, she called on the government to introduce tax concessions to come to the assistance of gold shop owners.

-- TNA 2004-09-03

[RDN]

Som nam naa, gold shops. What goes around comes around.

[ovenman]

SATUN: -- Owners of gold shops today urged the government to take action over rising gold prices, complaining that all their customers were selling gold rather than purchasing it.

Perhaps the Thai government can issue an edict whereby anybody who wishes to sell gold back to a gold shop shall be paid in chickens...

[Class C]

Why on earth are Thai's selling their gold ? Was it not their saviour in the Asian crisis ?

The base price for gold is in US$ which means the price of gold is the INVERSE of the US$. If you take a look at the US$ (trade weighted index)

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=dmax

..... it's easy to see why gold is rising. The question remains, with tripple deficits and a US trade gap of nearly $2 billion PER DAY, is the US$ going to continue falling or not ? Some real pro's (including Warren Buffet) say that it is simply impossible for the US$ to rise over the medium term which means gold is going to continue UP. My estimate for the price of gold next year is THB 10,500+ per baht.

Consider too this fact before you rush out to sell your gold:

Between year 2000 and 2003 (3 years) the Federal Reserve Bank in America added (printed or electronically created) more dollars into the system than they did in the entire two hundred and four years between 1776 and 1980.

To put this into historical perspective, Amadeus Mozart was only 20 years old in the year 1776 !

[astral]

Sounds like it will be a good time to buy gold soon,

once the price drops..........

market forces and all that.

[LivinLOS]

Class C, Good basic breakdown of some of the factors.. Also look at historically what one ounce of gold would buy you in the way of street commodities (how many suits / shoes / etc) and then even against US stocks ( ) and it is very easy to conclude Gold is very undervalued. I think we are at the begginings of a secular bull market in gold and have moved huge amounts of my assets into the only true currency that has never defaults. Fiat money is only as good as the belief that surrounds it, gold is a finite resource.

My bet is 1000 USD per ounce by q4 06 and perhaps even 2k per ounce if the excrement hits the airco a few years after. Its a very similar position to gold in the early 70's.

[Class C]

Yes, LivinLOS, in the 1430's (ok it's a long time ago) a 1000 gold florins could buy you a beautiful palace (1 florin = 54 grains and 480 grains = 1 troy ounce. 1000 gold florins therefore = 112.5 ounces of gold for a beautiful european palace).

Perhaps more interesting, if gold were to be remonetised equating current M3 with US gold reserves, you get a value of approx US$34,000 per ounce (US$9 trillion divided by 261 million ounces) which is approx THB 700,000 per baht

I worked for 10 years in the money markets specialising in off balance sheet derivatives (inter-bank interest rate swaps and foward rate agreements) and I am perhaps a little qualified to say that this derivative business is total madness. Current interbank derivative exposure (i.e. bets/gambles on the future levels of interest rates, going out as much as 20 years forward) now stands at nearly US$200 trillion (US$200,000 billion) which is approx 20 times more than all the dollars that actually exist and also 20 times more money than US annual GDP.

Good old Warren Buffet is I think quite correct when he says that OTC (unregulated) financial derivatives (e.g. interest rate swaps etc.) are "weapons of mass economic destruction, potentially lethal to the financial system." He also said that OTC derivatives are "like h e l l..... very easy to get into but nearly impossible to exit"

Put simply, any sudden moves in US interest rates could be disastrous for this capitalist system because of the massive leverage with these derivative positions.

Ok I am not going to harp on for too long but I will end with one more fact: the Federal Reserve Bank i.e. the Central Bank in the States is a PRIVATE organisation. They are never audited !

Sorry, one last comment: I am also bullish on silver (nguen) which looks like it could be waking up from a 500 year bear market(see graph) http://goldinfo.net/silver600.html.

Like 'nguen' means money and silver in Thailand, the word for the dollar originates from the word 'thaler' which was a silver coin.

Perhaps very fortunately for Thailand, OTC derivatives are illegal. This is one of the reasons I have such great respect for Thai people.

The meek shall inherit the earth

[Sphere]

If everyone sells, shouldn't prices fall automatically because of oversupply? Oh, I'm sorry, I confused the gold shop business with a free market economy.

[britmaveric]

Low season- guess BG(s) are flogging their wears.

[Limbo]

Thanks MR. Class C,

Very interesting and well-written in an understandable way.

If I understand you right, the USA just print new money when they need it (for instance to remove dictators they don't like and replace them with dictators they like).

PS. I always thought the Joachimsthaler was a golden coin. I should have known better.

[Heng]

Crippling gold shops. Yeah right. Maybe those who are overextended in other businesses perhaps. No one forces you to buy back gold. You just say you're overstocked, but we'd be happy to 'jam nam' (hold in pawn) it for you though at 3% interest per month. We'll loan you 5,000 on this 8,000 Baht piece.