Gold shops lobby fights against gold paper, and Thailand becomes net exporter of gold

There is a field where Thailand has nothing, nothing at all, to learn from western countries : the unbearable arrogance and the striking stupidity of the lobbies…

The Gold Traders Association is holding a meeting of members to organise collective opposition to the plan of the Thai Futures Exchange to offer mini gold futures contracts on February 8.

“Last year, we submitted two petitions to TFEX, asking it to delay or review the trading plan. There’s been no response. The smaller futures will directly hit traditional gold shops, and they provide a new gambling tool. This should be reviewed and this will give gold shops some time to adjust,” Jitti Tangsithpakdi, president of the association, said yesterday.

Each mini contract will be priced at Bt10. When gold futures priced at Bt50 were available last year, gold shops saw their business drop 40 per cent.

Jitti expects the mini futures to cut into the number of gold shop customers by 40 per cent. (Nation)

Jitti is a clown. But a baneful one.

What are we talking about here ?A trading instrument. And a complex one : future contracts.

Who are the largest group of customers of gold shops in Thailand ? Sophisticated investors playing on the Thai Stock Exchange ? Or Mister Somchai, or Miss Natanicha ?

Asking the question is even a disturbing proof of mental imbalances…

To summarize :  Jitti The Clown, the gold shop lobbyist, would like us to believe that this trading tool will reduce by 40 % the number of customers of gold shops ? When according to the same lobbyist, those shops have already lost 40 % of customers the previous year, when the first futures trading were created ? !

😉

Those people just want to keep their little business up and running. Who could blame them ? I wouldn’t. What we could blame are the means they use : gross lies.

Gold is not like a rice cooker, a laptop or a car. Or just “jewelry”.  Nowadays, during times of Great Manic Financial Bordello gold is special. Strategic we could say…

The real information contained in Nation’s article is coming after :

… resulting in the first gold-trade deficit last year. From January-September, Thailand imported 80 tonnes of gold, but exported 100 tonnes.

First gold trade deficit… Ever ?

And my readers could have known this. I spoke about it, following leads,through the prism of trade balance…

First, in february :

The mystery of february exports explained : gold and… Switzerland

And then in november :

Exports in september… Recovery ? The suckers, once again, fail to look at the details

Sorry to quote myself :

Someone is sucking out gold from Thailand, and Thailand is eager to please. […]

Attracted by high gold prices and probably because they badly need cash.. thai people are selling their gold. And then this gold is exported. Is it healthy ? Other people in the world (China)… are buying gold. Who do you think are the smartest ?

I mean : I was good on this one ! 😉

Jitti is unable to make a proper inference. Yes gold shops have less customers… Not because of a new trading tool, reserved to an elite, but simply because, regular customers can’t afford anymore to buy gold ! Prices are just too high for them.

And on the contrary, they are selling their gold. And once they have sold, they don’t buy again. Period. And then, eventually, the gold is leaving Thailand…

So I dare to repeat the question (and beyond Jitti The Lobbyist) : do you think that this situation is healthy ?

If you think that gold is nothing more than a laptop or a car, then thai people are without any doubt the wisest investors. However, we don’t need to hire Gallup to know that  thai people would probably be willing to buy more gold. But the truth is : they can’t afford it anymore.

On the contrary, if you think that gold is money… and real money, then the conclusion is obvious : it’s not healthy.

10 Responses to “Gold shops lobby fights against gold paper, and Thailand becomes net exporter of gold”


  1. 1 antipadshist 9 January 2010 at 11:14 pm

    TC

    I agree with your reasoning. particularly the part about normal / regular customers – their “logic” in selling their gold.

    I would add (based on personal observations and conversations with local people) : most of ordinary people are short sighted, so to say. they buy gold when it goes a bit lower (short time price fluctuation), and even that they do in small quantities (compare it with recent, in Nov, “SET in the city” fair in Siam Paragon, where gold bars were sold not less then 1kg – unlike in shops on Yaowarat, where commoner can buy 1baht gold bar – 15+gm); then they wait for a LITTLE bit, till price rises may be 1000 Baht per 1 baht of gold (or in other words, half of that price for ounce) and then rush to sell their gold en masse, making some small short sighted profit.

    of course, they can hardly be blamed: most of ordinary people can not afford neither buy gold in big quantities, nor keep it for a long period of time – what to speak to buy it steadily and regularly for REAL SAVING (or investment), despite ever increasing prices.

    so, practically, “small people” merely try to copy those short traders who speculate on temporary price fluctuation.

    gold traders though – now, these are sharks and wolves of actual gold business. they have many tricks and methods up sleeve.

    and surely, no any doubt, that they DO have a huge lobby in all spheres of running the country – be it economy, politics or even social affairs. hell, even in “spiritual” area too – in the sense that there are plenty of amulets and other gold paraphernalia (say, popular Thai “gold leaf” for sticking on images and statues in places of worship) which involve gold, including donations to temples.

    and of course – not to mention those ordinary people who buy gold for actual purposes of daily use as jewelry – here you’re right – their ability to buy gold decreases proportionally price raise.

    so, prices rise – and I mean, NOT only of gold but of everything else (food and other necessities – inflation). in fact, gold price raise is considered as one of the main sign and criterium of inflation. therefore, ordinary people – main mass or majority of customers of those gold traders – get under increasing pressure of managing to “meet the ends” (= have enough money for necessities), so that it is increasingly harder for them to buy gold either as jewelry, or as saving, or especially as a short time investment (“petty speculation” I would call it).

    and in months to come perhaps the number of those ABLE to buy gold at all – will decrease more and more. eventually (after a year or few?), perhaps ordinary people won’t be able to afford it at all – gold will become again as it always has been: the luxury unattainable by mere mortals, but ONLY what elite and rich can afford.

    that’s why gold trades (aka ethnic chinese) already know it and they make efforts – as re-orienting their trade towards World market (exporting to other countries), and at the same time closing their shops (as I recall on Thai TV was mentioned – from now existing 6000+ gold shops will remain only 1000).

    that’s why I think they are so furiously LOBBYING this issue ! 😉
    coz they DO know : pretty soon may be they’ll not be able to sell gold to commoners AT ALL (due to explained by you reasons) !

  2. 2 ThaiCrisis 10 January 2010 at 12:47 am

    The gold retailers make their money on “swings”, with the difference between buying and selling prices.

    Commoners (like you say, right word) used to buy (because fascination, gold mystique, “saving” syndrome), hold a little bit, then resale (need cash urgently, problems, or little speculation etc.). And the cycle starts again. Over and over again.

    But now the situation has totally changed, eventhough the factors haven’t changed (still the same mystique, still the same fascination, still the same “savings” willingness).

    But commoners can’t afford gold prices anymore. The number of transactions (swings) has decreased. Therefore the income of gold shops is going south, eventhough the prices of gold are going north.

    The current lobbying is against paper gold (futures contracts). Because, it’s likely to divert some investors money from physical gold, therefore reducing even more the number of transactions for gold shops.

  3. 3 Pricilla 10 January 2010 at 5:57 pm

    I personally suffer with the contrarian and unpopular belief that gold is overpriced and a very large correction is coming.

    I saw the article in the Post and found it very interesting as I would like to try to short gold, however I am aware shorting is tricky and can be dangerous, but if the price drops then very profitable. I believe have lots of research ahead of me and not much time to get up to speed!

    Agree about the article, what a load of rubbish, two completely different market segments. As if your average Thai who wants physical gold is going to be happy with a piece of paper he can’t wear.

  4. 4 antipadshist 11 January 2010 at 7:05 pm

    just now I came from our local dep. store – there I saw that gold shop is closed, which is pretty unusual coz normally it is opened daily till 9pm. there is some announcement that from now on it will close before 5pm daily.

    now, this might be just a single independent case not related to other gold traders – since I didn’t go to see some other shops. (although I do know that in China town such working hours were even before)

    but is also quite possibly be that these sly clever people know that some more unpredictable price fluctuation is coming soon and thus decided to take some sort of additional pre-cautions measures. (coz international gold trade starts at 8pm Thai time )

  5. 5 ThaiCrisis 11 January 2010 at 7:58 pm

    Or… because they have an important appointement with a doctor for instance. 😉

    I really don’t believe that thai gold retailers would have any insiders tips linked to eventual big moves on the gold world market.

  6. 6 ray 13 January 2010 at 4:20 pm

    thaicrisis.

    yr last sentence is very accurate. ” gold is real money” , period. it has been b4 the times of jesus..
    so thailand is selling “real money” for fiat currencies ie. that can be printed and whose value is declining with each passing day due to all the stimulus and bailouts and welfare states. china,india hell even srilanka is buying gold. this should tell u soemthing.

    unless the fed reserve reigns in liquidity, gold has no where to go but up. china has asked banks to have more capital reserves but in the western world they all are screamong for banks to lend and the govt will gurantee the loans.
    i think this year the thing to watch is the bonds/treasuries sales in the usa.the rates are inching up and there is evidence that the fed reserve is buying up the long term treasuries and china and othhers are buying only short term. in this scenario i think gold and other commodities will have a stellar year.

  7. 7 antipadshist 18 January 2010 at 4:46 pm

    this piece was posted (or more exactly copied’n’pasted) on namchiang website in English :

    China eager to buy IMF gold for $1,000 per ounce

    “Two months after India’s Reserve Bank made big global news with the purchase of 200 tonnes of gold from the International Monetary Fund (IMF), bullion traders are now waiting for the ‘golden’ news of 2010. The news in question: Will China buy the remaining 203 tonnes of gold from IMF soon?

    Several central banks from China, Russia, Brazil, and even a small country like Sri Lanka are said to be in the fray to buy the rest of the IMF gold reserves. It cannot also be ruled that India will be buying out the complete stock of IMF gold reserves…

    China is willing to buy IMF gold, but not at the high price that India paid. Gold price may be zooming to records; but China wants to wait and watch so that price of the yellow metal crashes to realistic levels. Now, the question is will China be able to buy IMF gold at $1,000 per ounce in 2010 “

  8. 8 ray 28 January 2010 at 12:23 pm

    antipadshit

    in 2009 $1000 gold was the ceiling. today it is considered the floor/bargain. how quickly things change??

  9. 9 antipadshist 31 January 2010 at 10:26 pm

    @Ray

    yeah, things can change VERY quickly indeed – especially taking into consideration the “high-frequency trading” (Max Kaiser blog had reported extensively on that) conducted by big “financial terrorist” companies 😉 – after all, all these guys are making huge profits from SPECULATION on short price fluctuations.

    now gold price lowered a bit – many ppl say it is a correction before it would shoot up again to the moon.

    interesting piece of news I came across today:

    Rothschilds Implicated in Fake Gold Bar Scandal
    millions of gold bars in Fort Knox are fake
    The revelations of fake gold bars also explains another highly unusual story that also happened in 2004:
    LONDON, April 14, 2004 (Reuters) — NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations
    …”

    another curious (although not really related to previous) piece:

    Multi-millionaire Rockefeller, former executive of Brierley Investments, Murdered, two people charged

  10. 10 antipadshist 31 January 2010 at 11:28 pm

    elsewhere a bit more details on murdered Herman Rockefeller :

    Who is Herman Rockefeller and Why Does it Matter?

    oh, 😀 and here are details about “fake gold-bars” :

    Voice of the White House Confirms Tungsten Gold
    (there scroll down a bit to article “The Voice of the White House”, and then a bit below: “Now, we have another happy report…”)

    It has been rumored for some time that gold bars (400 oz or 12.5 kg gold bricks) bearing the markings of the United States Mint were somehow adulterated and worthless. These have been showing up in banks and other institutions in Britain, Switzerland, France, Sweden, Iran, the UAE, India, Brunei, Italy and a number of other countries. These gold bars, all with American markings, are not gold. Instead, they are made of tungsten and then heavily gold-plated. Gold cost $12,000 per pound and tungsten costs $10 a pound… It was alleged that these bars, which had been showing up in huge numbers throughout the world, all purported to be coming from the United States Treasury and bore their markings…

    although naturally US / West rather blames China for making these fake gold-bars (read the rest of story)


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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