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Thailand eyes tighter controls on gold deals
Publication Date : 15-10-2013
Gold transactions will come under stricter control in Thailand as the authorities tighten their grip to prevent cheating and price volatility.
All gold shops nationwide, no matter whether their transactions are in physical metal or paper dealings, must register with the Commerce Ministry's Internal Trade Department.
At present, there are about 7,500 gold shops across the country, but only 900 are registered with the Gold Traders Association. Some have also embarked on online trading. Though the value of Thailand's gold import is about 300 billion baht (US$9.56 billion) per year, total gold-transaction value is about 1 trillion baht ($32 billion).
"We have witnessed a continual increase in gold-transaction value. But gold prices are closely tied with overseas prices, and volatility is huge. The Commerce Ministry will impose a regulation on fair business practices on the gold traders," said Deputy Commerce Minister Yanyong Phuangrach.
He revealed the plan after a meeting with the Bank of Thailand and the Gold Traders Association. This rule should increase business transparency among gold traders and give more assurance to consumers, he said.
Under this rule, gold traders will need to notify the department of changes in gold prices. They must also separate personal gold-trade accounts from corporate accounts.
Gold transactions are generally unregulated, offline and online. As the price of gold rises, more indulge in buying it for investment or speculative purposes. Some investors have recently complained of cheating, involving the purchase of forward gold contracts.
There were also reports that some investors used gold forward contracts to speculate on the baht's exchange rate with the US dollar.
Speculative demand in India has pressured its currency, the rupee. India imported 860 tonnes of gold in 2012 to meet the demand. India has the world's third-largest current-account deficit, which is approaching $90 billion, driven in large part by appetite for gold imports in the world's biggest consumer of the metal.
The government has asked Indian citizens to forgo temptation and help rein in imports that hurt the currency.