The price of gold – like most commodities – has fluctuated greatly in the past few months. Pic: Hein Latt Aung

MYANMAR’s gold market, like the global market for gold, has shown sharp fluctuations during the roller-coaster ride that commodity prices have experienced over the past few months.

Despite the isolating effect of strict import and export restrictions, as well as the traditional role of the precious metal in the local economy as a repository of wealth and a valuable item of barter, the price of gold in Myanmar broadly mirrors international price movements.

During the past several months, fluctuations in both the world market and in the Myanmar domestic gold market have been rapid and severe.

Gold hit a peak this year with a March 17 price (on the London afternoon gold price fixings) of US$1011.25 an ounce. By October 1 it had fallen to $880, bottoming out at $712.50 by October 24. This week, the price of an ounce of gold on the international market had edged back up a little at $734.

Gold also reached its highest price in Myanmar this year in March, when it touched K601,000 per tical. On October 24 the price hit a low of K516,000, and has risen slightly this week to K519,000 a tical. (One tical is 0.6 oz)
As with the world market, the price volatility of Myanmar gold is unpredictable.

Fluctuations can happen in minutes. During a recent interview by The Myanmar Times with Maung Kain Gold Shop manager U Thar Naing, the domestic price of gold changed three times, while the international price quoted on the TV screen remained unchanged.

U Thar Naing, a member of executive committee of Yangon Gold Entrepreneurs Association, said observers of the international market expected global gold prices to fall to $700, and that the Myanmar gold price would also gradually decline.

Though customers still come to U Thar Naing’s gold shops in Yangon and Mandalay, they don’t buy as much as they did.

He said: “When we opened our shop in 2000, gold cost just K50,000 a tical. By 2002, it was K190,000.”

“Sales have been falling for the past two or three years. Sales in Yangon are worse because there are fewer gold shops in Mandalay. And sales dropped significantly after last September [2007].”

Normally, gold sales are good in October (Thadingyut) and November (Tazaungdaing), and prices are high. But this year, though sales are down, prices have not followed, he said.

Power gold shop owner Daw Latt Latt agreed the price is still higher than it should be, given the slow rate of sales.

Daw Latt Latt also said domestic gold production did not meet local demand, a factor that contributed to price instability, especially since the Myanmar gold market was not directly linked to the international price-setting system.

Sources from the Mandalay gold market, as well as executive committee members of the Gold Entrepreneurs’ Association agreed that gold is rare in the country.

The owner of a popular gold shop in Mandalay told The Myanmar Times that Mandalay receives gold from Yamethinn, Singgu and Thabeikkyin. After the Thadingyut and Tazaungdaing festivals, some of the mineworkers take leave and return to their villages, while some mine owners are in protracted negotiations with the government over the renewal of their licence. These are both factors that can retard gold production, which tends to be highest in the summer months.

According to this source, production was down by 30pc compared to this time last year, and only about five to 10 viss of gold would come into Mandalay (1 viss equals 1.6 kilograms or 3.6 pounds). Another source disclosed that gold production at mines in Homalin, Katha and Wuntho in Sagaing Division and Myitkyina in Kachin State, was down as much as 50pc compared to last year.

Another factor in gold price instability is the turbulence of commodity prices during the current economic and financial storms worldwide. In years past, when the price of gold hovered around $200 an ounce, it could take six months for the price to change by $1 or $2. These days, the price can slump or soar $30 or $40 in a day. For instance, on the international market, gold advanced from $730.50 on October 28 to $764 the next afternoon. Sources say they have never seen such large swings.

But the disconnect between the world and domestic markets is such that, for instance, as the price in London rose from $729.50 on November 1 to $734 on November 17, the Myanmar price during that period fell from K526,000 to K523,000.

If gold does not fall further, it will be, according to some gold entrepreneurs, because it remains a safe haven for investors spooked by the fragility of other investment options – cars, for example – and distrustful of both stock exchanges and banks.