Laos has sufficient gold to meet surge in demand: Trader
The supply of gold jewellery in Laos will be sufficient despite the rapid increase in demand since last week, according to a gold trader.
“We still have enough gold jewellery for sale despite the unexpected surge in demand for the precious metal,” Mr Phouvong Phamisith told Vientiane Times on Friday. “I've noticed an increase of 10 to 15 percent in sales.”
Mr Phouvong is the President of the Lao Gem Jewellery Trader Association. His comment comes as people are flocking to jewellery shops in Vientiane to buy items made from the valuable metal after the price plummeted this week. Most shoppers are interested in buying gold with a view to long term saving.
On Thursday gold jewellery was selling for 5.6 million kip (20,800 Thai baht) for 15 grammes, down from 6.3 million kip in February. At the end of last year, gold jewellery was selling for about 6.8 million kip per 15 grammes.
The slump in value is due to the drop in the price of gold bars on the world market in response to changing economic conditions.
The government of Cyprus announced it would sell its gold reserves as part of efforts to rescue its economy from financial crisis. The increase in the supply of gold on the world market is one of the main reasons for the sudden drop in price.
Mr Phouvong said most of the gold sold in Laos is sourced from domestic gold miners. There are several small gold miners in Laos which supply the metal to the domestic market, such as the mine in Sangthong district, about 40km from Vientiane city centre.
An investment advisor with the Lanexang Securities Public Company in Vientiane said the slump in price was an opportunity for Lao people to buy gold for long term profit. He believes the price will soon recover.
“This is the first time in 30 years that we have seen such a huge drop in the gold price,” he said. This statistic shows the current situation is a golden opportunity for people to invest in the metal with a view to long term saving.
Other financial advisers said that while gold was the best investment option at present, people should study as much information as possible before making an investment decision, pointing out that any investment carries a risk of some kind.
They said it was not easy to accurately predict when the price of gold will recover, and that people should not make an investment decision simply because they want to copy other people.
According to international media reports, the price of gold bars reached a historic high of US$1,900 per ounce at the end of last year before dropping.
One of the main reasons for the rapid surge in the value of gold in recent years is ongoing economic uncertainty. Many people have abandoned stocks due to uncertain financial developments and consider gold to be the safest haven in a time of uncertainty.