Growing international demand for gold sees Cambodian shops shift from imports to exports
CAMBODIA’S gold prices have surged 11 percent over the past two months, according to Phnom Penh dealers, as the precious metal fetched record highs in New York trading on Friday.
Gold briefly surged to a new high of US$1,263.70 a troy ounce on New York’s Comex exchange Friday, before closing at $1,258.30 for August delivery. The precious metal is often seen as safe haven by investors, analysts say.
Gold at Ly Hour Exchange, Cambodia’s largest dealer, sold at an all-time high of $1,510 per damlung, or 1.2 troy ounces on Sunday, rising 11 percent over April costs, owner Sieng Lim said.
“Gold prices have risen sharply over the last two months. It’s likely due to the demand of gold as a safe haven with the euro debt crisis,” she said.
Cambodia traditionally imported gold from Singapore or Hong Kong, but increasing international demand is leading the Kingdom to export the precious metal, according to Sieng Lim.
“Shops are collecting gold jewellery and are melting them down as gold bars, and exporting them to foreign markets,” she said.
Phnom Penh-based dealer Virin Ratanak Gold Jewelry said the metal has reached record domestic prices in recent months, and that the surge is benefitting Cambodians who denominated their savings in gold.
“The Khmer people traditionally like saving in gold, so when gold prices rise, people are getting good returns on their savings,” Virin Ratanak said.
Precious metals are one of the favourite methods for Cambodians to store value, according to a 2007 Asian Development Bank report on rural savings.
“Saving in gold or jewellery is common, as these assets serve the purpose of elevating the social status of the households in their communities. They are also easily convertible to cash in times of need,” the report said.
Virin Ratanak added that Cambodians have been avoiding gold purchases with the soaring prices, and are increasingly turning to precious stones to store value.
“When customers buy diamonds, they can use them for however long they like, and sell them back to us, losing only 10 percent,” she said.
Gold prices have constantly increased in recent months, she said.
“It’s difficult to foresee the future, whether it will go up or down. I think prices may remain at the record level, or go even higher in the future,” she said.
Cambodian Association of Mining and Exploration Companies (CAMEC) president Richard Stranger said analysts’ predictions often differ, but that the prevailing opinion is that prices will remain high for some time to come.
“It’s very good from the perspective of the companies exploring for gold in Cambodia because it makes everything that’s discovered far more economically viable,” he said.
Consumers in China and India are buying and holding gold, he said, helping to drive up prices for the precious metal, and adding incentive for gold explorers.
“The bottom line is that we’re looking at a situation where there is a lot of demand. Some of the less feasible [mining] operations are getting close to being possible,” he said.