Government pawnshops at risk of loss from pawned gold

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BANGKOK, 26 April 2013 Gold prices remain volatile over the past week, with the continuing downward price trend resulting in such large demand from the public that gold jewelry makers have almost been unable to produce ornamental gold in time. 

Gold shop owners indicate that as far as they are aware, gold ornaments are now selling at the briskest pace in 20 years.

In the meantime, government pawnshops under the jurisdiction of the Social Development and Human Security Ministry are at risk of experiencing losses from the pawned gold items they currently hold in storage. If the gold price continues to decline, individuals who have pawned gold may decide not to redeem the pawned items.

It has been estimated that 1 billion baht worth of gold items will be left at the pawn shops if gold ornament price drops to 18,000 baht per baht weight. This will cause the government pawn shops to lose a combined 100 million baht. However, losses will be less severe should the gold price stop its downward spiral and start to increase.