Metal mania

Metal mania
PHOTO: Metal mania

No warnings. No signs. No indications at all.

It just hit by surprise.

That was how Mr Parthiban Murugaiyan, 43, described the situation when the price of gold suddenly plunged to a two-year low three weeks ago.

According to goldpricenetwork.com, 21k gold dropped from $59 a gram on April 14 to $53.80 the next day. It climbed and dropped the next few weeks, settling at $51 a gram on Sunday night.

It cost an average of about $65 per gram before the plunge, he says.

The volatility of the cost of gold is largely why Mr Parthiban is reluctant to hazard a guess on its future price trend.

"Nobody ever expected the prices to plunge this much," he says. "Usually, there is some kind of sign - but this wave simply took everyone by surprise."

"It was just like a gold tsunami," Mr Parthiban, managing director of Indian Jewellers at Serangoon Road, says of the customers who came rushing in for their piece of the precious metal.

Mr Parthiban, 43, tells The New Paper on Sunday: "I don't think gold has ever been in such high demand. At least not in the 27 years of our shop's operation."

The prices have since creeped up a little - Mr Parthiban attributes it to the correction of gold - but that doesn't seem to have affected the appetite for gold. And his customers are certainly not backing down as they still throng his and other shops in Little India.

"Compared to the normal price, the prices are still low as it is now sold at about $57.50 per gram," says Mr Parthiban, who has another gold shop, Luvenus Jewellery at Changi Airport.

In fact, the gold tsunami, as Mr Parthiban described, was still very much in force last week when The New Paper on Sunday visited shops in Chinatown and Little India.

At Indian Jewellers, despite it being a weekday evening, there was a constant stream of customers coming in to the large and spacious store.

As soon as they spotted a sales staff who was free, the first question asked would be: "How much is the gold today?"

And when they hear an answer that is less than $60 per gram, they would be hunched over glass display cases, poring over the glistening gold jewellery laid out in front of them. Some come back multiple times during the day after checking out the rate at neighbouring stores.

Even people who are not cash-rich want to be part of the gold rush. Some Indian and Bangladeshi workers come in and ask: "Where is the jewellery that is just 2g?" Within a few minutes, they would be paying $150 in cash for a thin chain for about $150 in cash.

But many of the customers were often couples - women accompanied by the men who would whip out their credit cards. and pay the bills.

Ms Latha Kannan, a yoga therapist, was accompanied by her husband, Mr Kumar, as they browsed the store.

Mr Kumar, a teacher, says as he pats his shirt pocket containing his credit card: "You know, as Indian men, our duty is to buy gold for our wives."

His wife simply agrees with a laugh: "Of course!"

Ms Ramabraba Murugaiyan, 42, who oversees sales at Indian Jewellers, points to the plain gold chains and says: "It is the rope chains that run out the fastest.

"They are considered an investment that can be worn every day."

She says that in the days following the sharp decline in prices, the store ran out of stock for the chains.

"We had to look to other suppliers for gold jewellery, but they were out as well," she says, almost in disbelief.

"We had been ordering more stock in time for Akshaya Tritiya on May 12 and 13, which are the auspicious days to buy gold for Indians, because that is when we usually run out.

"And then all of a sudden, there was a gold rush that we didn't expect."

Mr Vincent Lee, a gold supplier from Aik Hong Goldsmith, comes to Indian Jewellers at about 7pm. Ms Ramabraba looks at him expectantly as he rolls out a velvet bag with gold chains in it.

Ms Ramabraba tells this reporter: "You see, usually, this bag will be filled with shiny gold.

"Now you see so many gaps in between. We don't have much to choose from."

Mr Lee says: "We have had such a high demand from shops that we supply to, and now we have run out of gold to make the jewellery in the first place."

"We have never experienced this kind of problem before," says Ms Ramabraba.

Mr Parthiban, her brother, echoes her sentiment.

"While it is certainly a happy problem, all the gold sellers are confused and are left scrambling," he says.

Mr Parthiban says that advance bookings for gold for the Akshaya Tritiya festival this year have easily doubled compared to last year - and bookings are still rolling in.

One of the branch managers at Arthesdam Jewellery on Serangoon Road, Ms Alice Chew, says she is seeing at least 20 to 30 per cent more sales in gold.

Mr Ivan Ho, who runs Hengseng Pawnshop in Toa Payoh, says: "Previously, we had certain peak periods during the day, but now people are coming in all the time."

Mr Ho, who is also the chairman of the Singapore Pawnbrokers Association, adds: "Even passers-by who don't intend to buy gold but know of the decrease in gold price will step in and eventually buy something."

The manager of Kim Heng Jewellers & Goldsmiths at People's Park Complex, Mr Henry Ho, tells us that he is a little thankful that prices have gone up a little - because there have been less people compared to three weeks ago.

"There was at least a 60 per cent increase in sales of gold bars and gold jewellery, especially necklaces and bracelets," says the 43-year-old.

"Now, it's not as much but it's still very crowded. We are running out of stock and our suppliers cannot replenish on time.

"They can only give us new stock in a month because of the demand."

He says, resigned: "No choice, lor. Just have to wait."

Retailers like SK Jewellery also reported a spike in customers, so much so that their showrooms have also run low on gold.

A spokesman for SK Jewellery says: "With the enticing lower gold price point, we see many more returning customers and new customers buying in larger weights and bigger pieces."

She said the popular pieces include bridal gold weighing over 90g, and 100g or heavier gold bars.

Some customers are even preparing for the future, says Mr Ho.

"We even had some customers buy jewellery for their daughters' dowry when they are just maybe 17 or 18 years old," he says.

Madam Kasturi Samyvelu is one of them. The 48-year-old was at Kamala Jewellers on Labour Day, shopping for intricately designed gold necklaces and traditional Indian earrings. They cost her about $3,000.

"My 20-year-old daughter is probably going to get married soon, and I thought it would be best to buy first."

She added: "I don't know if the prices are going to be this low again in about three years."

Madam Kasturi is the type of customer Mr Parthiban would classify as a "buy first" customer, the other type being those who take the "wait and see" approach.

Mr V. Balu, 46, a director of sales and marketing, and his wife, Madam K. Seetha, 45, a nurse, says they are in the "wait and see" camp.

But that doesn't stop them from buying two pairs of earrings for their mothers for Mothers' Day next week, costing $1,100 in total. Mr Balu says: "We will have to wait before we decide to buy more jewellery for ourselves."Undergrad stocks up on gold bars 

Mention gold bars and you'd think of cackling heartland aunties.

Well, not anymore.

These days, well-educated professionals, some in their 20s, are buying up gold bars, says Mr Zane Lim, regional manager of operations of BullionStar.

Set up last August by Swedish dealer Liberty Silver, BullionStar deals with gold and silver bullion.

Bullion refers to precious metals in bulk form - think bars - which are regularly traded on commodity market.

With the prices of gold tumbling three weeks ago, demand for gold bars have increased.

The slump was a response to weak Chinese growth data and reports that crisis-hit Cyprus was planning to sell some of its gold reserves, explains Mr Lim.

He tells The New Paper on Sunday that while the majority of people purchasing gold bullion are 30 years and older, there has been a significant increase in younger people buying them.

Mr Lim says total sales in April have far exceeded the total collective sales of previous months.

He adds: "We have seen a 300 per cent jump."

He says: "Of course, they buy the smaller bars that are around 50g to 100g that are about $3,033 and $6,040 currently, whereas the older professionals usually go for the 1kg bars."

One such young buyer is 21-year-old first-year undergraduate Matthew, "I am mostly using my savings accumulated over the last few years to purchase these bullion - often in small amounts."

Currently, he has about 2kg of silver. who says he buys bullion in small amounts as an alternative to a savings account.

"I treat it as a better form of savings compared to something like placing money in the bank.

"Instead of merely getting some interest from the banks, there is more to be gained from the bars because at some point, the price will appreciate," he says.

He has, collectively, about 2kg in silver. And with the recent drop in gold prices, he bought two tiny gold bars - each weighing 5g and costing about $370.

While he keeps most of his bullion in bank vaults and deposit boxes, he does keep some of his precious metal at home, in his room.

As such, he requested that we only use his first name because he fears he will be identified and risked being robbed.

"I am intending to buy more to take advantage of the gold price so that I can sell them should I need money in the long term," he says, adding that he keeps track of the metal prices online.

Mr Lim adds: "And surprisingly, most of them prefer to bring their bullion home where they can see it everyday." "I'm sure they even sayang it sometimes," he says with a laugh.

Though prices are currently increasing, Mr Lim says it is not too late for people to get their hands on some gold bars.

"It is still a very good buying opportunity as the current prices are still way lower than the record US$1,900 (S$2,344) per troy ounce (31.10g)," he says.

That makes it a cool $75.40 per gram.

He added: "Buying gold is also good because the world is getting increasingly uncertain economically, so it makes sense to buy into precious metals like gold that has retained its value and has been used as a currency for over 5,000 years."

Mr Song Seng Wun, a regional economist at CIMB Research, says that it may be wise for people to look forward to the next round of slumps in gold price that should happen in the near future.

"From my perspective, there may be another round of price correction, so there will be another chance for people to buy gold bullion at a lower price."

Nuggets of gold facts All the gold in the world

• Gold is a precious metal and if you knew how hard it is to extract from the ground, it would be even more so.

Mines in South Africa go down as far as 3.6km deep and reach temperatures as hot as 50.5 deg C.

One ounce of gold requires 38 man hours, 1,400 gallons of water and enough electricity to run a large house for ten days.

That's not including the use of chemicals like cyanide, acids, lead, borax and lime.

South Africa produces about 500 tons of gold annually, and nearly 70 million tons of earth is raised in the process.

• The medical properties of gold were so highly thought of that medieval Europeans used it as a "cure" for the bubonic plague, which killed a quarter of the European population in the 14th century.

The wonder cure was an expensive drink of molten gold and crushed up emeralds in order to escape the Black Death.

No, it didn't work. In fact, drinking molten gold may have caused the deaths of a few who could have escaped the plague.

• Gold, along with copper, are thought to be the first metals discovered by man about 7,000 years ago.

• The world's largest stockpile of gold can be found underneath New York.

Five stories underground, the Federal Reserve Bank of New York's vault holds roughly 25 per cent of the world's gold reserve, or about 540,000 gold bars. Most of it belongs to foreigners.

• Due to its rarity and value, almost all of the gold ever discovered is still in circulation.

It is estimated that only 20 per cent of the world's gold has been unearthed.

• 50 per cent of the world's gold is used for jewellery, 40 per cent for investments and 10 per cent for industrial use.

• Gold is resistant to most chemicals and keeps its lustre, even when buried for thousands of years.

• You shouldn't drink the molten variety, but you can eat gold. It is used as a luxury decoration and in Asia, it can found in fruit, jellies, coffee and tea. There are even gold facials.

• Gold is an excellent conductor.

The Royal Bank Plaza Building in Toronto coated 14,000 windows with a thin layer of gold. The coating reflects heat radiation and helps to keep buildings cool in the summer and warm in the winter.

• 100 per cent pure gold is so pliable that it can be made into sewing thread. It can even be molded by hand.

• In 1912, Olympic gold medals were made entirely from gold, each one weighing 250g. At 24k purity, the medals would contain about $13,000 worth of gold.

Sorry, current Olympians. Today's top medals are covered in just 6g of gold.

• There are disputed figures about how much gold there is in the world. Estimates range from 155,244 tonnes to 2.5 million tonnes.

As of March, Thomson Reuters GFMS, which produces an annual gold survey, estimates that there are 171,300 tonnes, which - if it fills Wimbledon Centre Court exactly - would create a cuboid 9.8m above ground level.

Its value would be around $106.5 trillion.

The Gold Standard Institute came up with the 2.5 million figure. That amount could create a 50m-tall cube.

• India is the world's largest market for gold jewellery, representing about 746 tonnes of gold in 2010. Indian women are said to collectively own about 18,000 tonnes.


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