Gold shops are big business in Thailand.
If you’ve ever visited Bangkok’s Chinatown you will see that the Thai’s love their gold. And not just in Bangkok. Most cities in Thailand will have a good supply of gold shops. Many look quite similar from the outside. You will see these shops lined up one after the other whenever you are in a gold trading precinct.
A lot of the gold shops in Thailand have Chinese lanterns hanging out the front of the shopfront. This is because many of the gold trading families in Thailand are decedents from China who immigrated to Thailand several generations ago. And they continue to carry on the family business today.
In Thailand, gold is a traditional store of wealth and it is still widely used today for investment purposes as well as a hedge against currency devaluation.
Gold also plays a big part in Thai weddings. It often forms part of the traditional dowry, the sin sod, where the groom will gift gold to the bride’s family.
What is a Baht of gold?
A Baht of gold is not to be confused with the Thai currency (THB), which shares the same name.
Although, the Thai Baht currency did get its name from the unit of measure that is used for gold.
This is due to gold being a commonly used form of money (along with silver coins) for settling a transaction, up until when the Thai Baht was created in 1902.
And when the THB was created, it was given the same name.
The Baht is the standard unit of measure when buying or selling gold in Thailand. So you need to get familiar with it if you are going to trade gold in the country.
The easiest way to think of it is that a Baht of gold is about half an ounce.
To be exact, a Baht is equal to 15.244 grams. This is slightly less than half a Troy Ounce, which weighs around 31.1 grams.
What is a See Salueng of gold?
When you visit a gold shop in Thailand and start looking at gold bars you will discover some more quirks to the system.
Some 1 Baht bars will have a 1 stamped on them. And other bars of the same weight will have a 4 stamped on them.
And some half Baht gold bars will have a 0.5 stamp, as you would expect. But then others will have a 2 stamp.
Well, its all about the Salueng.
The number 2 on a half Baht gold bar means Song Salueng. In English, Song means Two. And Salueng means Quarters. Or ‘two quarters’ of a Baht. That is, half a Baht.
And the number 4 displayed on a 1.0 Baht gold bar means See Salueng, or ‘four quarters’ of a Baht. Or a full Baht.
Sometimes vendors will refer to a Baht as ‘See Salueng’ when you are discussing purchasing options with them. So it’s handy to understand that.
Just remember:
2 = Song Salueng = 0.5 Baht
4 = See Salueng = 1.0 Baht
How do you buy gold in Thailand?
Buying gold in Thailand is easy. All you have to do is visit one of the many gold shops that exist in all Thai cities.
No passport or ID of any kind is required. You are essentially buying ‘off the record’ in the sense that the sale is not registered with any authority or government agency. That said, you can have a receipt written up as proof of purchase for your own piece of mind.
Do your research for sure. Go and talk to a few different vendors. You will find that they are generally happy to talk with you and explain the ins and outs of the Thai gold trading system and how it differs to foreign markets.
The standard purity of gold bars in Thailand is 96.5%
Another thing you need to be aware of when buying or selling gold in Thailand is that the standard purity for Thai gold is 96.5%. Or 23 Karat.
It’s important to note that this is a lower purity than the international standard which is 99.99% or 24 Karat.
In Thailand 99.99% gold is sometimes referred to as ‘four nines.’
Are there arbitrage opportunities for buying gold in Thailand?
With all of the variables at play here – difference in unit of measure, the difference in purity, and the exchange rate – there may be some opportunity for an arbitrage gain. Although when I crunched the numbers there wasn’t much in it. But there may be some opportunity when buying or selling in volume.
All of the gold shops in Thailand set their prices based on the per Baht price that is published on the Thailand Gold Traders Association website. The set price is updated at intervals throughout the day. But it is not a live spot price as such. So there may be an opportunity to trade the mismatch in price between updates.
The Gold Traders Association website also references the gold price in Hong Kong, London and New York.
How to store gold in Thailand?
Some gold shops offer on-site storage. And there are some private storage services. But there aren’t any private vaults with the level of sophistication and security that you get in countries like Singapore or Switzerland.
Some people like to use safe deposit boxes offered at Thai banks such as Bangkok Bank or Kasikorn Bank. You may need to first open a bank account before you can access additional services.
However, many people also like to store their Thai gold securely at the family home or on other private property.
The buy/sell market
Buying and selling gold in Thailand is quite efficient as far as the buy/sell spreads go. The going rate on the spread is about 100 Baht (THB) per Baht of gold. This is the equivalent of around $2.60 per half ounce at the time of writing.
Compare this to somewhere like Australia where the buy/sell spread on a half-ounce bullion is around $34.
This is great for people living in Thailand as it facilitates a very efficient market for buying and selling at minimal brokerage cost. The market will be much more liquid at the lower end as a result, when compared to our example in Australia. This is a big plus for investors who like to trade in and out of gold at smaller volumes.
Repatriating gold back to your home country
You need to check the import regulations in the country that you are travelling to with your gold. There may be duties and other taxes levied on the gold.
Some countries have rules that allow you to get around their import regulations if you are transporting gold coins rather than gold bars. That’s if the gold coins have been minted as legal tender.
There are often tax exemptions available for importing gold so long as the purity is over a certain level. In New Zealand and Australia, gold bars that are 99.5% or greater in purity are exempted from having to pay GST. Unfortunately Thai gold, being 96.5% doesn’t qualify.
Another option can be to have your gold bar melted down and converted in to some kind of jewellery that you can then wear on your person. This can be done quite cheaply in Thailand. But again, check the regulations of the country in which you plan to transport your gold to.
In most cases there isn’t anything illegal as such when moving gold from one country to another. The question is usually whether there will be duties and other taxes levied on your gold, or not.
Can you transport gold into Thailand?
Getting it out of the country is one thing. But can you get your yellow back into the country? This could be an issue if reselling back into the native 96.5% 23 karat market is an important factor for you.
Of course you will hear the stories about people walking through customs with their gold in their pockets, undeclared. But this could also get you into hot water. You may be forced to leave your gold bars with customs and then pick them up again when you leave the country.
And then there are concerns with costs and security. Not to mention any penalties that may be thrown your way.
You may need an import license to do it by the book. It would be a good idea to get proper advice before making any major moves.
Offshore gold as an asset protection strategy
There are always complications that come with transporting and accessing wealth across different jurisdictions. For some of us that’s half the fun. And for some it’s a key part of their offshore asset protection strategy.
But it’s not always practical either. That is often the nature of offshore asset diversification. It always takes a bit more work to maintain the high hanging fruit. And that’s half the point. It goes both ways. As in it’s harder for raiders to get to as well.
At the end of the day, you have to find a balance that works for you.
Should you buy Thai gold?
For gold enthusiasts who want to add an interesting addition to their precious metals portfolio – sure go for it.
If you spend a lot of time in Thailand or have good access to the country (for you and your gold) – absolutely.
If you want to trade your gold on international markets – not so much.
The ideal market for trading Thai gold is in Thailand itself and not so much in offshore markets. In particular not the international markets that use 99.99% 24 Karat gold as the standard for trade.
The 96.5% 23 Karat Thai gold could make it difficult to resell into international markets without taking a discount.
