BANGKOK – With gold prices rising to a seven-year high, many Thais have been flocking to gold shops to trade in their necklaces, bracelets, rings and gold bars for cash, eager to reap profits during an economic downturn.
Gold shops are de facto financial institutions in Thailand and generally have remained open in the country where measures taken to guard against the spread of COVID-19 have been less severe than in other countries. Long lines formed all week outside major gold shops in Chinatown in the capital Bangkok.
The sell-off has some gold shop owners claiming they are facing a liquidity crunch, leaving them short on cash to continue purchasing.
They are unable to carry out their normal practice of quickly reselling the gold abroad because of the greatly reduced number of flights to ship the gold and a shortage of buyers in other countries, who are restricted by lockdown orders and market closures.
Jitti Tangsithpakdi, chairman of the Gold Traders Association and owner of Chin Hua Heng Goldsmith Co, told The Associated Press that more than 90% of recent gold shop customers are sellers.
Shops are bound by tradition to buy back the products they sell. Prices are fixed by an industry association.
“There’s never been a case where a goldsmith doesn’t buy back the gold, especially if the gold carries markings showing it is from their own shop,” Jitti said. It would destroy customers’ trust in that goldsmith.
Prime Minister Prayuth Chan-ocha, heeding industry appeals, urged restraint on the part of sellers.