Thai Government Pawnshops At Risk Of Loss From Pawned Gold

[webfact]

Government pawnshops at risk of loss from pawned gold

BANGKOK, 26 April 2013 (NNT) – Gold prices remain volatile over the past week, with the continuing downward price trend resulting in such large demand from the public that gold jewelry makers have almost been unable to produce ornamental gold in time.

Gold shop owners indicate that as far as they are aware, gold ornaments are now selling at the briskest pace in 20 years.

In the meantime, government pawnshops under the jurisdiction of the Social Development and Human Security Ministry are at risk of experiencing losses from the pawned gold items they currently hold in storage.

If the gold price continues to decline, individuals who have pawned gold may decide not to redeem the pawned items.

It has been estimated that 1 billion baht worth of gold items will be left at the pawn shops if gold ornament price drops to 18,000 baht per baht weight.

This will cause the government pawn shops to lose a combined 100 million baht. However, losses will be less severe should the gold price stop its downward spiral and start to increase.


-- NNT 2013-04-26

[sfbandung]

"However, losses will be less severe should the gold price stop its downward spiral and start to increase."

Good to see the article was penned by a financial genius.

[rfukata]

besides the gold, so what is the risk loss in the Rice export going to be?

[Ricardo]

Hope that nobody points out the inconvenient fact, that the same risk applies to the rice-mountains, currently growing all over the country !

Whoops, I just did !

[noitom]

No one believes for a minute that the Thai government would ever lose any money in an operation "trading" gold with ordinary everyday Thais.

[GentlemanJim]

I am sure this will give the opportunity for one or two Thai politicians to purchase the 1 billion of Gold from the gov shops for a mere fraction of the price, tjhrebye saving the Thai people from losing everything

So the loss may be 100 Mill across evry pawn shop.....2 million GBP, that's not so bad at all. All the Gov need do is keep the gold and it will soon pay back. And just how much do this Gov lose on rice storage costs each month? 12 Billion baht!! I would like to offer ten key people in the Government a management development course on setting priorities but at 300 US$ per person they will say it is too expensive

[Locationthailand]

The estimated (reported) 100M loss is utter garbage as this is on the assumption the pawn shop paid top retail for the gold and no pawn broker ever pays that. This is only a reduced margin or they can hang on to it until it rises again. Rubbish article about a whinge from the Govt crying poor when they have lost billion in corruption. Get it right.

[loong]

Have they not noticed that the price of gold has risen over 150 $ /oz in the last 2 weeks following the dramatic 2 day fall?

I know that the Thai gold price may not precicely follow the world gold price, but it should be somewhat in step.

[rogerdee123]

This may give the Govt a new policy idea : the gold-buying scheme

For this scheme, the Govt buys gold from the public at 20% above market prices to stimulate the economy

rice ... gold ... what's the difference

[Halion]

Serves them right for being so loody greedy. The Government have no business being involved in this. Hope the loose a bundle.

[kimamey]

I hope my wife doesn't see this. I already spend time in restaurants explaining the difference between 'prawn' and 'porn'.

[how241]

Have they not noticed that the price of gold has risen over 150 $ /oz in the last 2 weeks following the dramatic 2 day fall?

I know that the Thai gold price may not precicely follow the world gold price, but it should be somewhat in step.

+1

[khunken]

Have they not noticed that the price of gold has risen over 150 $ /oz in the last 2 weeks following the dramatic 2 day fall?

I know that the Thai gold price may not precicely follow the world gold price, but it should be somewhat in step.

+1

+2

The article is written by someone who hasn't bothered to monitor gold prices over the last 2 weeks.

Following the 2-day drop, the price has been rising (an upward trend) and according to the other paper, rose B550 (per Baht weight) overnight.

[chiang mai]

"However, losses will be less severe should the gold price stop its downward spiral and start to increase."

Good to see the article was penned by a financial genius.

Thai national news is not worded for the benefit of geniuses, it's worded for mostly rural people who are quite the opposite and who don't have the benefit of a western education, you're a bright lad so you could have figured that one out, or perhaps not!

[chiang mai]

I am sure this will give the opportunity for one or two Thai politicians to purchase the 1 billion of Gold from the gov shops for a mere fraction of the price, tjhrebye saving the Thai people from losing everything

So the loss may be 100 Mill across evry pawn shop.....2 million GBP, that's not so bad at all. All the Gov need do is keep the gold and it will soon pay back. And just how much do this Gov lose on rice storage costs each month? 12 Billion baht!! I would like to offer ten key people in the Government a management development course on setting priorities but at 300 US$ per person they will say it is too expensive

Wheee, a conspiracy theory in the making!

[sfbandung]

"However, losses will be less severe should the gold price stop its downward spiral and start to increase."

Good to see the article was penned by a financial genius.

Thai national news is not worded for the benefit of geniuses, it's worded for mostly rural people who are quite the opposite and who don't have the benefit of a western education, you're a bright lad so you could have figured that one out, or perhaps not!

Never claimed to be a bright lad.

My father in law is a member of the "rural people" you speak of and if they are savvy about nothing else, they are very au fait with commodity prices. Perhaps I was being unjustly harsh but it did seem to be stating the obvious.

[harrry]

Serves them right for being so loody greedy. The Government have no business being involved in this. Hope the loose a bundle.

Actually they do. It is a way in which ordinary people who are not used to dealing with banks keep their savings in gold. When they need money urgently they either sell it or take it to a Government pawnbroker where for a fixed controled interest rate they can pawn it giving them the oportunity to redeem if if they can after paying the medical bill or whatever.

[thrilled]

Gold can't stay down very long.People in asian countries love the stuff.And in India they practically worship thec stuff.They can't get enough of it.

[Payboy]

A business at risk because of market fluctuations! Wow! Who woulda thunk?

[RisqEM]

Welcome to the free market. or as we like to say, the rest of the world!

[Thai at Heart]

Welcome to the free market. or as we like to say, the rest of the world!

Oh yeah. They shut up shop when the price plummeted.

Last time I looked I can't exchange gold on 7 11. Using this as any store of wealth or against catastrophe is as useful as a chocolate teapot.

[bri1guy]

Serves them right for being so loody greedy. The Government have no business being involved in this. Hope the loose a bundle.

Actually they do. It is a way in which ordinary people who are not used to dealing with banks keep their savings in gold. When they need money urgently they either sell it or take it to a Government pawnbroker where for a fixed controled interest rate they can pawn it giving them the oportunity to redeem if if they can after paying the medical bill or whatever.

I dont think the Pawn shops mentioned here are Gov Pawnbrokers..

It is a good time to Buy gold ...

[harrry]

Serves them right for being so loody greedy. The Government have no business being involved in this. Hope the loose a bundle.

Actually they do. It is a way in which ordinary people who are not used to dealing with banks keep their savings in gold. When they need money urgently they either sell it or take it to a Government pawnbroker where for a fixed controled interest rate they can pawn it giving them the oportunity to redeem if if they can after paying the medical bill or whatever.

I dont think the Pawn shops mentioned here are Gov Pawnbrokers..

It is a good time to Buy gold ...

"government pawnshops under the jurisdiction of the Social Development and Human Security Ministry are at risk of experiencing losses from the pawned gold items they currently hold in storage."

from the original article.

[loong]

They don't have to worry anyway.

The recent drop was a blatant case of manipulation but they underestimated the Chinese resolve to soak up any drop in gold prices.

I don't know how many USD the Chinese hold in their foreign currency reserves, but it should be quite obvious that the USD that they hold are basically worthless IOUs. If they can swap worthless IOUs for an asset such as gold that has a real tangible worth, they will do it.

Germany wants its gold that is stored in the US and UK, but they can't get delivery of it. Why? because it has been lent out to institutions that have shorted gold.

More gold has been sold than actually exists and more and more investors that have invested in gold are demanding physical delivery of their gold. Problem, they have been sold non-existant gold.

As more investors want their gold instead of a paper contract, the short sellers will be forced to buy gold at a higher price than they sold it for. Most of them will default.

Those who hold paper gold will lose their investments and the short sellers will go bankrupt.

Those who hold physical gold will see a massive increase in value of their investments because demand is much higher than supply.

The problem is that when the price of gold soars there will be a massive movement out of the $ and other western currencies

Just my opinion.