The Thai gold rush: buyers flock as prices hit two year low

[buksida]

Local gold has been sold below Bt20,000 per baht weight for the first time since 2011, following a sharp fall in global prices over the past few days.

Bullion for immediate delivery was at US$1,379.50 (Bt39,770) an ounce at one point in London trading, while gold fell to a two-year low of $1,321.95 an ounce yesterday on growing optimism that an economic recovery - particularly in the US - will curb demand for the precious metal as a protection of wealth. The price of gold bullion has lost 18 per cent so far this year, after rising six-fold in a 12-year rally through last year.

In an interview with Bloomberg TV, Cypriot Finance Minister Haris Georgiades confirmed yesterday that the Cyprus government planned to sell part of its gold reserves within the next few months.

Sales of assets and gold are a way to raise revenue in order to unlock the €10-billion (Bt380 billion) European Union bail-out package for the ailing island-state.

Thai gold prices were adjusted eight times yesterday for an aggregate cut of Bt2,400 per baht weight to Bt18,950, as business resumed after the long Songkran holiday period.

The falling prices drew heavy traffic to Yaowarat gold shops. As some shops remained closed, others were crowded and inventory, particularly that of bullion, ran out.

Hua Seng Heng, the oldest gold shop in Chinatown, had to issue coupons to clients, urging them to pick up their purchases on April 24.

As gold and silver prices changed more than 10 per cent, the Thailand Futures Exchange temporarily halted trading in order to help investors digest news.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong, trying to calm the nervousness, said the dip would be short-term as gold remained an asset with relatively high security. Gold-price speculation is normal, he added.

Mathee Supapongse, Bank of Thailand's senior director at the Macroeconomic and Monetary Policy Department, said sliding prices had no impact on the growth forecast, as gold prices had not been taken into account in forecasting the economic outlook.

"Gold was set up for having a proper correction," Jim Rogers, chairman of investment company Rogers Holdings, said on Bloomberg TV. "This may be the proper correction and, if so, then it will make a bottom and we can all buy gold again because it is going to be much higher over the decade."

During March and April, many researchers revised down their gold-price forecasts for this year. Goldman Sachs, for example, cut its forecast for the precious metal to $1,545 an ounce from the $1,610 it predicted earlier.

"Given gold's recent lacklustre price action, and our economists' expectation that the acceleration in US growth later this year to above-trend pace will support US real rates, we are lowering our dollar-denominated gold-price forecast once again," said the US investment bank. "While higher inflation may be the catalyst for the next gold cycle, this is likely several years away."

France's Societe Generale has also lowered its gold outlook for 2013, to $1,500, while Nomura has cut its forecast from $1,981 to $1,602.

"For the first time since 2008, the investment environment for gold is deteriorating as economic recovery, rising interest rates and still-benign Western inflation [for now] will leave some investors rethinking their cumulative $240-billion investment in gold over the past four years," said the Japanese institution.

Source: The Nation

[musungu]

I would not be surprised to see GOLD falling further over the next 12 months, of course there will be ups and downs in between but overall 2014 could see $1,250

[MrPlum]

It's bizarre to read the U.S. economy is recovering when there are fiscal cliffs, sequestration and indefinite QE. Gold was overbought when it topped at 27,000 so you would expect a pull back. Methinks the big boys are 'shaking the tree'.

[sargeant]

I will wait and go with musungu

Made a nice little earner for my wife last time round

[charlesh]

And only Thais would buy gold now knowing that it would go down further this year - does not make sense unless it is money laundering.

[STEVE G]

Hua Seng Heng, the oldest gold shop in Chinatown, had to issue coupons to clients, urging them to pick up their purchases on April 24.

An astute move in a falling market!

[MrPlum]

http://www.zerohedge.com/contributed/20 ... york-comex

'The London gold fixing is conducted twice a day by five banks: Barclays Plc, Bank of Nova Scotia (BNS), Deutsche Bank AG, HSBC Holdings Plc and Societe Generale SA. The pricing started in 1919 and was conducted in a meeting held at N.M. Rothschild & Sons Ltd.’s offices. It began taking place by telephone in 2004.'

'Concerns have previously been expressed by investors due to the admission that leverage in gold trading in the London bullion market - the ratio between metal traded and metal actually existing - was as much as 100 to 1. This means that the so-called physical market may not be so physical at all.

The enforcement division of the CFTC began pursuing allegations of manipulation of the New York metals exchange, the COMEX silver market in September 2008 (the COMEX is a division of the New York Mercantile Exchange or NYMEX). Chilton said in August that there had been “devious efforts” to move prices of the precious metal through the concentrated short positions of a few banks.'

Ordinarily I would be a buyer because I've learned that when the likes of Goldman Sachs are telling everyone to sell, it pays to do the opposite. A classic example is Bitcoin. However, if the banks have huge short positions then there's no knowing where the bottom is.

Coin toss anyone?

[Bristolian]

The conspiracy theorists are out in force with the proposition that the tumble in gold prices is US driven. With all of the US economic woes, fiscal cliff, QE etc., this is a way for the $ to gain strength as gold investors look elsewhere to place their wealth.

Not my theory!

[MrPlum]

Not my theory!

Which is?

[Bristolian]

Not my theory!

Which is?

None of the above. I checked many of the plausible reasons for the sudden fall in hold. Amongst my research there was a common conspiracy theory. This I have posted. It actually sounds plausible. I found nothing tangible to back up the theory which is often the case with conspiracy theories.

[sargeant]

During March and April, many researchers revised down their gold-price forecasts for this year. Goldman Sachs, for example, cut its forecast for the precious metal to $1,545 an ounce from the $1,610 it predicted earlier.

OOPs that shows they knew diddly squat then

[charlesh]

I read of a gold scam in which gold ingots with mint stamps and numbers were being sold however when sectioned found to contain a core of Tungsten. I wonder where that came from? Maybe the fed gold reserves in the US are not as buoyant as we are lead to believe.

[sargeant]

I read of a gold scam in which gold ingots with mint stamps and numbers were being sold however when sectioned found to contain a core of Tungsten. I wonder where that came from? Maybe the fed gold reserves in the US are not as buoyant as we are lead to believe.

[StevePIraq]

And only Thais would buy gold now knowing that it would go down further this year - does not make sense unless it is money laundering.

I wouldn't put anyone down for buying gold now as it is still a very good buy compared to a year ago, however I totally agree that it will continue to slide as it has been at a manipulated high for to long.

[sandemb]

Because the density is so similar to gold (tungsten is only 0.36% less dense), tungsten can also be used in counterfeiting of gold bars, such as by plating a tungsten bar with gold,[54][55][56] which has been observed since the 1980s,[57] or taking an existing gold bar, drilling holes, and replacing the removed gold with tungsten rods.[58] The densities are not exactly the same, and other properties of gold and tungsten differ, but gold-plated tungsten will pass superficial tests.[54]
Gold-plated tungsten is available commercially from China (the main source of tungsten), both in jewelry and as bars.[59] Quote from Wiki ---- Let the buyer beware!