PETALING JAYA: We may be in the middle of one of the worst recessions ever, but the demand for gold continues to rise to record levels.
The price has reached the stratosphere. Last Tuesday, it hit a historic high of RM8,443 an ounce (28g) as Malaysians continue to add to their collection of gold trinkets.
There is no sign that the demand and price will see a reversal any time soon, according to market players.
Despite the economic fallout caused by the Covid-19 pandemic, this has been a special year for goldsmiths, Federation of the Associations of Malaysian Jewellers and Goldsmiths president Datuk Steven Siow Dek Kuen told theSun yesterday.
“They have made a fortune during this unprecedented time in Malaysia,” he added.
Industry players have attributed the rise in demand to a tendency among people to invest in gold as the value of cash dips.
Jeweller Nik Haniff Nik Hamid said as of yesterday, the price for “916” gold had reached RM262 per gram, the highest since 2011.
The owner of the Kedai Emas Merchant9 in Kuala Lumpur said despite the rising prices, people are flocking to his outlet.
Malay women account for 80% of his customers, Haniff said, adding that during uncertain times, the Malay community would go for gold as they see it as an investment.
He said there had been a 32% increase in price in just six months. Before the Covid-19 pandemic, the price per gram was below RM210.
Siow said despite the fact that many households are facing financial pressure, there is still a surplus of cash, thanks to government handouts in efforts to help those most badly affected by the economic fallout of the pandemic.
“Many have taken the opportunity to buy gold because it is a stable investment,” he said.
“The low interest offered by banks is also driving people to invest in gold.”
Siow expects prices to continue on an upward trend. He said overall sales have risen by 40% in May and June while the total nationwide figure reached RM1 billion in those two months.
“The figure could be higher, given that the data was extracted from only 1,500 members (of the federation),” he said.
According to Bloomberg, investors are searching for “safe havens” that won’t lose value, leading to a surge in the demand for gold to cushion the impact of an inflation.
Financial education trainer Dr Desmond Chong noted that gold is an anti-inflation currency and as a result of the uncertainties caused by Covid-19, Malaysians would rather invest in something that is more secure and resilient to global economic variables.
“Many people are using gold as (insurance) to secure (their wealth) during the pandemic, especially those who are investing in physical gold,” he said.
“Gold is a stable medium for long-term investment and if you want to avoid a (financial) roller coaster, look to gold as it will not depreciate in value. Also, you can (convert) it to cash,” he said.
On whether buying gold is better now than buying a new house as an investment, he said one needs to look at his or her own investment portfolio.
He said the difference between the two is that gold is easy to sell, unlike houses that require time to turn a profit.
In 2014, former prime minister Tun Dr Mahathir Mohamad also advised the people to keep gold as a hedge against currency devaluation because the value of gold is more secure.
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