Analysis – Southeast Asian Gold Market and Government Reserves
The precious yellow metal is fairly widely (although irregularly) distributed throughout Southeast Asia. The majority of the countries in this region actively mine gold both for the domestic and international markets. Also, gold plays a huge role in the cultures of these countries with it being used in various festive events and ceremonies. Below we take a look at the gold markets of various countries listed in order of overall gold production.
China is the world’s largest producer of physical gold in the world. Records show that China has the largest gold reserves of about (a reported) 1,842.60 tonnes as of the 18th of June, 2018. This represents about 7% of gold reserves in the world. Apart from being the largest gold producer, China is also the largest consumer of gold. Nearly all the gold produced in the country ends up being used in the country for jewelry and a variety of other industrial uses supported by a growing upper and middle class.
Japan comes second after China with a gold reserve of about 765.20 tonnes. It boasts a deep and liquid gold market and long-standing liquid exchange trading of gold futures on the Tokyo Commodity Exchange (TOCOM). Japan is also well-known for having a large number of gold refineries. As of 2015, investment demand for gold jewelry and gold bars and coins totaled about 32.8 tonnes. The Japanese are known to use physical gold as a store of value and a currency hedge. They also tap into gold banking products.
India comes in third with gold reserves of about 560.30 tonnes as of the 18th of June, 2018. Being a fast-rising economy, a majority of the gold demand is driven by a rising middle class. A large part of the gold demand is met via gold imports. India comes second to China as a gold-consuming nation. The Indian government controls entities which are allowed to import gold into the country. India has a few gold refineries and has two active commodity exchanges, MCX and NCDEX that feature gold future contracts.
The Philippines come in at the fourth position with gold reserves of about 196.40 tonnes. Gold mining in the country is a bit difficult as the country’s mining sector remains largely untapped due to political controversy and turmoil. It is estimated that there are about 200,000 to 300,000 individuals who work in small-scale gold mines within the country. However, the gold collected from these mines remains unknown and unaccounted for. Gold investment in the country isn’t as popular as in other countries. Locals tend to purchase designer jewelry rather than high karat gold jewelry.
Thailand takes the fifth place with estimated gold reserves of about 154 tonnes as of the 18th of June, 2018. Thailand boasts of a developed and healthy gold market that is supported by a strong domestic demand and a well-developed sales and trading infrastructure. There are about 7,000 gold shops and goldsmiths across Thailand, ranging from large chains to family-owned shops. Gold in Thailand is held for investment reasons such as financial security. It is also gifted during weddings and religious ceremonies. A majority of Thailand citizens also purchase gold in the form of jewelry, gold bars, and gold coins.
Singapore comes in sixth with estimated gold reserves of about 127.40 tonnes as of the 18th of June, 2018. Singapore ranks as the most business-friendly economy in the world. This makes it a choice location for international investors to store their gold assets. The majority of banks in Singapore deal in gold retailing and gold products. They tend to offer gold certificates, gold savings accounts, and they sell and buy a variety of gold coins and gold bars. Singapore has a large middle-income class that purchases gold products and jewelry from jewelry stores and online platforms.
Indonesia takes the seventh place with estimated gold reserves of about 80.60 tonnes. Indonesia has one of the largest gold mines in the world, the giant Grasberg gold mine. The country also has an internationally recognized gold refinery, a booming large jewelry sector, and a wide variety of gold investment products. Gold trading is widespread in the country with a majority of the younger generation taking an active part in it. Gold is also gaining popularity as an investment vehicle with a majority of gold investment participants being situated in the capital city, Jakarta.
Malaysia comes in eighth place with estimated gold reserves of about 37.60 tonnes. Malaysian citizens are also familiar with holding gold as an investment, a store of value, and as a currency hedge. The Malaysian gold market puts an emphasis on gold jewelry fabrication, especially for the export market. Gold in Malaysia can be found in most jewelry shops and banks. Also, gold is used in most wedding ceremonies and in festive seasons for gifts. However, the domestic demand for gold in Malaysia only accounts for about a quarter of the total demand, with a majority of the gold exported.
Laos has estimated gold reserves of about 0.90 tonnes. The gold market in Laos is under strict control of the government. AIF Gold is the only licensed company to import, trade, and distribute gold in the country. The country boasts about four major gold mines and over thirty small mines. Gold in the country is deemed more stable than its national currency. Therefore, most people use gold as a store of value and as a hedge against the national currency’s depreciation. Gold is also worn during special occasions such as marriages.
The Southeast Asia region provides a large market for gold and gold products. A majority of the countries in the region offer gold services and are renowned for using gold in their cultures. Gold is set to thrive off of the economies of these countries in the future. If you find this information useful and you have an interest in investing in gold yourself, we encourage you to check out our gold price-backed token, the DinarCoin.