Gold Bar Comission?

[jaideeguy]

Just bought a 2 baht bar of gold from a gold shop.....sell price was posted at 19,700, but the gold shop said that there was a 'surcharge' of 300thb per baht of gold. Wife's translation was that it is new policy and effective all over CM [and the country?] because of the cost of making the bars.

Have bought gold bars in the past and never a charge for bar gold.....that's why i didn't buy jewelery>

Has anyone experienced same?/ or can explain>>>

[gregb]

It is not a "new" policy. It is not even a policy at all. It is simply the premium that most shop owners have settled on as justifying their efforts to keep physical on hand so you can buy it in small bars. A few shops started doing it a couple years back, and now nearly everyone does. Typically, a bar will have the lowest commission, and 300 baht is about as low as you can go unless you have a really long standing relationship with the shop owner. I recently picked some stuff up at a place we've been going to for a long time, and gotten as low as 150 on a simple bar when the owner was in a good mood. Mostly I buy from an investment house though if I just want straight bullion. They will still buy/sell with only a 100 baht spread.

There are also still some chains you can get for a 300 baht premium if you ask, but do keep in mind that as the price of gold rises, the spread needs to rise as well in order to keep the same percentage cost basis. Even if a shop hedges, there is a cost to carry the gold, and that cost is directly proportional to the spot price. As spot goes up, so do the risks/hedging costs of running a gold shop. They have to pass that cost onto you somehow or they go out of business. At least here in Bangkok, I haven't seen a retail shop sell a bar of any size without a premium since 2008. They'll also try and get you for a few hundred baht when you sell it back to them. In short, bars are just like chains to the retail shop, just with the lowest cost of craftsmanship. There is nothing really special about them.

If you haven't encountered this issue before now, either you've been very lucky, or you haven't purchased gold for a while.

[jaideeguy]

It is not a "new" policy. It is not even a policy at all. It is simply the premium that most shop owners have settled on as justifying their efforts to keep physical on hand so you can buy it in small bars. A few shops started doing it a couple years back, and now nearly everyone does. Typically, a bar will have the lowest commission, and 300 baht is about as low as you can go unless you have a really long standing relationship with the shop owner. I recently picked some stuff up at a place we've been going to for a long time, and gotten as low as 150 on a simple bar when the owner was in a good mood. Mostly I buy from an investment house though if I just want straight bullion. They will still buy/sell with only a 100 baht spread.

There are also still some chains you can get for a 300 baht premium if you ask, but do keep in mind that as the price of gold rises, the spread needs to rise as well in order to keep the same percentage cost basis. Even if a shop hedges, there is a cost to carry the gold, and that cost is directly proportional to the spot price. As spot goes up, so do the risks/hedging costs of running a gold shop. They have to pass that cost onto you somehow or they go out of business. At least here in Bangkok, I haven't seen a retail shop sell a bar of any size without a premium since 2008. They'll also try and get you for a few hundred baht when you sell it back to them. In short, bars are just like chains to the retail shop, just with the lowest cost of craftsmanship. There is nothing really special about them.

If you haven't encountered this issue before now, either you've been very lucky, or you haven't purchased gold for a while.

Thanks gregb for the confirmation.......actually the last time that I bought bar gold was a bit over a year ago [2250thb=1 bhat] and I don't remember a comission....just the sell price. Wish that I had bought more then.

Today's experience made me think that I maybe should have bought silver. Someone posted recently on the CM forum Canadian 'maple leaf' 1oz selling for $4 over spot.

[PoeDogg]

I sent your question to a friend that buys gold and silver here, and this is his response.....

"they do that same shit in all small towns ...buy bars in BKK china town and not have this problem ...also have option of 99.5 % thai gold as well as standard 96.5"

[klauswernst198]

Complete Rip of ! ! which will happen only if you buy from small shops

Much better to buy from Large shops. Of Course Chinatown is the best since the will even accept to buy back large quantities on weekends. with the price of of closure of the spot market on Friday. Specially interesting if as usual the Chinese hike their interest rate on Saturday and on Monday Gold prices go down a lot.

[Chunky1]

if you are paying 300 baht commission on per baht you are getting ROBBED.

[jaideeguy]

The last three replies conflict with the first. I guess the only way to confirm is to go into the big Chineese gold shops in downtown CM and will report here.

[Chunky1]

results?

[teatree]

Sounds like an upcountry thing. You won't get this if you go to a major BKK goldsmith such as Hua Seng Heng.

[Kwasaki]

Sounds like an upcountry thing. You won't get this if you go to a major BKK goldsmith such as Hua Seng Heng.

Maybe OK if your in Bangkok, " an upcountry thing " I think you are right about that !! In Sukhothai I paid 150 baht for each 1 baht of gold all the goldshops do it here, there is no haggling it is labelled as a goldsmith charge.