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Thailand’s Gold Market: An Introduction

By SBMA, with contributions by Ross Andrew Friedman

Physical gold is a popular asset in Asia, and this is no different in Thailand, the continent’s third-largest gold market after India and China. Locals use physical gold as an investment and as well as ornament, and the metal is a popular gift for newborns and for weddings.

In Thailand, the standard fineness of gold is 96.5% purity, commonly referred to as 23K, often bought in the form of jewellery, gold bars or coins. Baht is not only the local currency but also the standard gold unit, equivalent to 15.244 grams or 0.4901 troy ounces. Thai gold is also measured in salung, which is a smaller unit compared to baht, where 1 salung is 0.25 baht, or 3.81 grams.

Domestic Demand and Production

Global physical investment in 2019 dropped by a fifth to a low for the decade. East Asia accounted for the bulk of the decline in demand, which fell by 36%, of which Thailand comprised a significant portion, along with China and Japan.

The total physical investment demand in Thailand in 2019 fell by 49% from the previous year to 34.7 tonnes, according to Metals Focus. The Bank of Thailand, the country’s central bank, holds 154 tonnes of gold in its reserves.

There are nine local gold bar manufacturers that are members of the Thai Gold Traders Association. They manufacture normal investment baht bars, traditional baht bars (in biscuit, square, oval, round, rectangular, boat, and doughnut shape), and innovative thematic bars with a purity of 96.5% (23K) as standard, and also 99.99% (24K).

Additionally, paper gold is available in Thailand, including the 50 Baht Gold Future contract and exchange-traded funds (ETFs), listed on the Stock Exchange of Thailand. Such market activities are well-supported by the members of the Gold Traders Association of Thailand.

Gold Infrastructure

Gold shops and goldsmiths, estimated to number around 7,000 in Thailand, are found across the country and include large chains to family-run stores. Major companies in the gold sector include YLG Bullion, MTS Gold, Ausiris, Hua Seng Heng, and MKS, the Swiss precious metals group. Umicore operates a precious metals refinery in Bangkok – the only LBMA good-delivery silver refinery in Thailand. Apart from refining precious metals from recycled materials, it also produces investment-grade fine gold bars.

SPC Precious Metal – a fully integrated precious metals refinery located in Chonburi province that is accredited by the Responsible Jewelry Council – is focused on producing precious metals products from recyclable materials and industrial by-products. SPC trades physical commodities and transforms them into customised products for jewellery manufacturers, electronics manufacturers, and more. Many of its customers are from Japan, Korean and China, which make use of the Free Trade Agreement the countries have with Thailand.

In general, the import and export of gold are conducted by non-bank enterprises, which need to register with the Ministry of Commerce, Revenue Department and Customs Department. Besides registration, they also need to submit a foreign exchange report every quarter.

All imports and exports of gold are VAT exempt. VAT is 7% as at August 2020. Corporate tax is 20%.

Room to Grow

Despite being overshadowed by the larger gold markets of China and India, Thailand boasts a developed and healthy gold market of its own, which is supported by strong domestic demand and well-developed trading and sales infrastructure with its neighbouring countries. Thailand also has larger physical market than any of its regional neighbours, including Vietnam, Malaysia and Singapore.

As countries in the region have the potential to grow economically, there is room for the Thai gold market to grow as a regional centre. Thailand has active Free Trade Agreements with Japan, South Korea, China, India, Australia, New Zealand as well as Chile and Peru – two Latin American countries that are rich in precious metals. No doubt, Thailand plays an important role in connecting countries in the the Asian gold belt.

Appendix

Currency Import and Export Restrictions Related to Gold Trading in Thailand

An importer may purchase or withdraw foreign currencies from their own foreign currency accounts for import payments upon submission of supporting documents. Alternately, importers may use letters of credit, which may be issued without authorisation, to guarantee trades. By law, export proceeds of US$50,000 and above shall be repatriated immediately after payment is received and within 360 days from the export date. The proceeds must be sold to or deposited in a foreign currency account with an authorised bank in Thailand within 360 days of receipt.


10 Baht Bars


Oval / Square / Round / Boat / Doughnut


Kilobar from Bangkok Assay Office


Image source: Gold Bars Worldwide

Thailand Economic Data (2019)

Thailand2019
Population67.9 million
Economic Growth2.4%
GDPUS$545 billion
GDP/PUS$8,021
CPI0.9
ExportsUS$243 billion
ImportsUS$216 billion
External Debt31.6% of GDP
Source: Focus Economics



Source: Thai Customs


Source: Thai Customs


Source: LBMA

HS Code:
HS71081100: Non-Monetary gold in powder
HS71081210: Non-monetary gold in lumps ingots or cast bars
HS71081290: Non-monetary gold in other unwrought forms
HS 71081300: Non-monetary gold in semi-manufactured forms


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