You are here

Is Bank of Thailand buying gold on the sly?

Section: Daily Dispatches

Thailand: Who's Buying Gold?

By Tim Johnston
Financial Times, London
Monday, September 13, 2010

Gold demand is volatile, especially in Asia, but what on earth is happening in Thailand?

According to some numbers buried in the Thai customs website, gold imports in July, the latest month for which data is available, hit 55.4 billion baht ($1.8 billion), which is equivalent to a bit less than 45 tonnes and more than 13 times June imports of 4.1 billion baht ($130 million).

There are a few possible explanations. Thailand is a global jewellery hub -- the world's biggest cutting centre for coloured stones -- but jewellery demand was significantly down in June and July.

... Dispatch continues below ...


Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.

For Prophecy's complete press release about its production plans, please visit:

Previous months had seen significant exports, but restocking doesn't seem to account for the rise either. Nor does leakage into Vietnam, whose demand for the glittery stuff is immense but fairly constant.

So the numbers have got tongues wagging in Bangkok -- and one player keeps being mentioned: the central bank, the Bank of Thailand.

The Thai baht is running at 13-year highs, up 8.4 per cent against dollar so far this year, which is not only worrying for exporters, but also for the bank, which holds $157 billion in foreign reserves.

The Bank of Thailand won't say how much of that is held in dollars, but a straw poll of Bangkok economists suggests that it is somewhere between 60 and 85 per cent, and they've already said they are trending away from the US dollar.

But if that 60-85 per cent estimate is right, every 1 per cent of appreciation in the baht is costing between $940 million and $1.33 billion in reserve losses on dollar holdings alone. At the top end, that's close to 0.5 per cent of GDP, or a little more than 2 per cent of the 2010/11 budget passed last month.

So has the Bank of Thailand been in the market? They aren't saying, but the Thai Customs website might be getting a few more hits than usual in the coming weeks.

* * *

Join GATA here:

Toronto Resource Investment Conference
Saturday-Sunday, September 25-26, 2010
Metro Toronto Convention Center, Toronto, Ontario, Canada

The Silver Summit
Thursday-Friday, October 21-22, 2010
Davenport Hotel, Spokane, Washington

New Orleans Investment Conference
Wednesday-Saturday, October 27-30, 2010
Hilton New Orleans Riverside Hotel

* * *

Support GATA by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit:


Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property

On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.

Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."

For complete information on Sona Resources Corp. please visit:

A Canadian gold opportunity ready for growth