Nothing says I Love You to a Thai bar boy quite like the gift of gold. A bit of gold bling to show off how much his most recent admirer values him is never a bad thing. And when that farang hops on his plane for the return trip home, the boy can make a return trip to the gold shop to turn it in for baht. It’s no coincidence that the Thai weight measurement for gold and the nation’s currency share the same name. But then the belief that all bar boys are just after your money aside, gold in Thailand has always been viewed more as a commodity than as decoration for your body. And with the recent price of gold dropping faster than John Travolta to his knees at the sight of a male masseur, you can show your love for a fraction of what it would have cost you just a few months ago. Provided you can find some to buy. The gold that it. The boys are always plentiful.
The savvy punter concerned about the status of his bank account quickly learns a thing or two about dealing with bar boys. This may be a good time to learn a thing or two about how gold is bought, sold, and valued in Thailand too. Thanks to Cyprus’ decision to dump its gold reserves on the market last month, the precious metal’s value has decreased dramatically. With Slovenia, Hungary, Portugal, Spain, and Italy all in line to pull the same stunt, it may even go lower. Some industry experts claim $1,200 an ounce will soon be the standard. But many experts also predict its price will again soar, possibly even as high as it’s September 2011 peak of $1,920 in the near future. If you are willing to take the risk, gold can be a good short-term investment right now. That thought is responsible for a run on gold in Bangkok; many gold shops on Yaowarat Road have no gold for sale thanks to prices plunging below 20,000 baht.
Gold Traders Association chairman and owner of the Chin Hua Heng gold shop Jitti Tangsithpakdi reported last week that Bangkok’s famous gold buying neighborhood was facing a severe shortage due to the feeding frenzy caused by low prices. “There’s no gold to be sold because manufacturers can’t produce the items quick enough,” he said, adding that some gold shops have begun competing with each other in a battle to buy gold from sellers. For bullion right now, it takes 5 days to fill a customer’s order.
Though gold is currently running at about 20,200 baht per baht-weight – up from the price that had earlier tumbled to 18,600 – Jitti believes that by the end of the year it will return to its levels from the beginning of this year, between 24,000 and 25,000. But before you decided to cash in on what may seem like easy profits, you should know a few fundamentals about the gold trade in Thailand. And before you decide to cash your affections in on a bar boy, knowing how Thais view gold ain’t a bad thing to know either.
Thailand’s Special K
Carat or karat (symbol: K or kt) is a measurement of purity for gold, not to be confused with the carat used as a measurement of weight (mass to be precise) for semi precious and precious gemstones. 24K gold is considered fine, meaning the alloy is 100% gold (actually 99.9% but let’s not get hung up over a fraction). 18K gold, which is typically used in Europe for jewelry is 75% gold with the remaining 25% made up of other metals such as silver and copper. In the U.S. the standard for gold jewelry is 14K, which is slightly more than 50% gold; it has a brassy color compared to jewelry with a higher gold content. In Thailand the gold’s purity is 96.5% or 23K though it can sometimes be closer to 22K and is often called 24K among those who don’t know any better. The purity of Thai gold makes it a good investment vehicle; it is easily traded and readily converted to currency. That’s why it has always been a popular purchase in Thailand and why your boy du jour will take a baht chain over the latest iPhone model any day of the week.
Of course Thailand being Thailand, while a dealer selling to touri will talk about karats, the price is always determined by baht weight, which is a unit of weight measurement where 1 Baht is equal to 15.16 grams of gold when it sold as jewelry and 15.244 grams in raw bullion form. With a purity of 96.5 percent (23K) there is normally 14.71 grams of pure gold in 1 Baht, which is a little less than half a troy ounce (0.473 ozt). The important thing to remember is that the only thing Baht gold has to do with Thailand’s currency is that you’ll use the latter to pay for the former.
The Gold Traders Association sets the price for gold and every shop in Thailand uses that standard; they are required to immediately change their display prices when the price is announced. Gold is sold in many forms – jewelry is popular for obvious reasons – while bars, biscuits, commemorative coins, Chinese coins, etc. are usually purchased strictly for investment purposes. While the price of each form differs from the standard price for gold bullion bars, it is a minor difference; a charge for craftsmanship on a piece of jewelry may be, for example, 200 baht. And a gold dealer’s buying price from a member of the public is often no more than 100 baht less than the price he would sell the same piece for. So a baht chain purchased, worn for a while, and then sold back for cash – assuming the official gold price has not changed – will only be devalued by about 300 baht from the cost if originally purchased in bar form. And that means while you are wearing your heart on your sleeve, your boy du jour will be wearing his net worth around his neck.
Putting Your Mouth Where Your Money Is
Finding a place in Bangkok where you can purchase gold is as easy as finding a place where you can buy bootleg dvds. But since the cost will be a bit higher than your new copy of one of Hollywood latest blockbuster movies, you should take a bit more care in where you decide to shop. MBK, for example, is a popular place for touri to buy gold. And some dealers there sell at reasonable prices. Many, instead, go with the prices charged to the touri trade. If its a bauble for yourself, a fair price is whatever you are willing to pay. If it’s a token of your affection for your boy du jour, the grimace on his face in seeing how much you are gonna put out compared to how much he’ll realize when he resells it should tip you off that you may not be getting the best deal in town. Ditto if instead of a grimace he greets the store clerk by her first name.
If you just have to shop for gold at one of the malls, look for a easily seen sign listing the current selling price of gold. All gold shops are supposed to post current prices as set by the Gold Traders Association. The reputable ones do. The rip-off places don’t. And those who charge based on the color of the skin of the buyer may, but the sign is usually small and hidden away. Or written only in Thai.
Yaowarat Road in Chinatown has been the home of gold trading in Bangkok for a couple of centuries and is the best place for you to buy gold. There are several hundred shops to choose from. Most will display the obligatory prices, often on the front window of their shop. The prices will almost always be in Thai, but that’s not because they want to cheat tourists, it’s that touri make up a small fraction of their customer base. Originally, the four main gold shops were Seng Heng Li, Hua Seng Heng, Tung Jin Aeng, and Tang To Kang. And while most shops are reputable and are members of the Gold Merchants Association, these four are still your best choice. For several reasons.
First, ripping a tourist off is hardly worth their time; they have enough business that getting some extra baht out of the occasional touri is just not worth the effort. Second, while you may not be buying gold to resell it some day, if it is a gift for your boy du jour, that will be an important part of the transaction to him. Any dealer in town will buy back gold from one of these four shops. A lesser known store, not so much. Reputation counts and dealers do not want to have to test every piece of gold for its purity. And lastly, there is value in any unusual experience and shopping at one of the Big Four will be an experience unlike anything you have ever encountered while shopping.
The size and clamor of the crowds inside will make you think they just offered free Justin Bieber tickets with every purchase. The floor of the NY Stock Exchange looks calm in comparison. You’ll also get some momentary enjoyment out of the confusion you cause your boy by being savvy enough to know where to buy gold, but un-savvy enough to not know he’ll be cashing in whatever you buy him early the next day.
Worth His Weight In Gold
You may think your boy du jour is worth his weight in gold, until you find the pricey piece of bling you bought him ended up at the local pawn shop. A familiar tale of woe, that scenario often results in yet another disgruntled farang who confuses the intrinsic value of gold with a token of love. Silly farang. In Thailand, jewelry and other gold objects function as a form of financial security; in case of difficult times the gold can be pledged or pawned until the family’s finances improve. For farang from the U.S. where the question of the legality of owning gold is still confusing to the lay person, and where the purity of gold in jewelry is too low to hold value as a commodity – the amount of work it takes to melt 14K gold down and extract the pure gold results in a value that is only a tiny fraction of what that piece of jewelry originally cost – it’s hard to grasp the Thai attitude toward owning gold where it is considered the same as having money in the bank. The fact is that the degree of probability that your boy will sell any gold jewelry you purchase for him is the same as that Thai gold’s degree of purity: 96.5% (the remaining 3.5% is ‘cuz I’m a glass half full kind of guy).
When your ideal of love and your boy du jour’s view of gold meet, don’t be surprised at the result. Your token of affection may be expressed in karats, to him it’s just another opportunity to participate in the typical gold for baht shtick embraced by bar boys for decades. You may think handing him a wad of cash instead might be the way to go; it would be easier on all concerned. But baht and a bar boy’s pocket is never a long-term love affair. Gold’s advantage is it makes you think twice before spending it, and most Thai bar boys need help with that bit of financial self-discipline.
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