BANDAR SERI BEGAWAN: As many parts of the world see an upward trend in gold demand due to its rising value, this side of the world has not seen much enthusiasm in the market trend of the commodity that has seen a sharp rise in its price since last year, Borneo Bulletin says.
Analysts noted that international gold prices started falling the first quarter of this year and began fluctuating throughout the second quarter. It dropped markedly in May and is now beginning to rise steadily again.
A goldsmith, which has been in operation for almost 12 years in the heart of the capital, said there is hardly any surge in demand for gold, no matter how the market trend is.
“Locals don’t buy them for investment purposes but rather as personal accessories or gifts as part of the local custom and tradition,” said a manager of GH Goldsmiths and Jewellers.
He also noted that gold prices have seen an upsurge in its value.
“A few years ago it was valued at around $40 per gramme. But today, it can fetch up to $80 per gramme, which is already 100 per cent of its previous value. Other countries might see a rush in people buying gold but it has been business as usual here,” he said.
He attributed this to the lack of awareness and understanding on the market trend of the commodity and the lack of savings culture here.
Karen from Goh Brothers Goldsmith, which has been in operation for 15 years in the capital, meanwhile, said that people in Brunei tend to spend their extra money on gadgets such as new mobile phones and cars, which commonly depreciates in its value.
“With the extra money they get from their bonuses, living allowance (ESH) and special gifts from His Majesty, they could have invested their money by purchasing gold, as its value is steadily increasing and this is a good investment for future,” she added.
Running up to the Hari Raya Aidiffltri festivities, the goldsmiths told the Weekend Bulletin there was also no significant increase in demand for gold.
“It is because of a lot of factors – perhaps gold is already getting out of trend as there are many other alternatives for jewellery out there. This is proven because it is no longer popular with the younger generation. The market for gold here is no longer favourable like it used to be back then,” said the manager of GH Goldsmiths.
Karen also shared the same sentiment and said business has been usual for them running up to the festivities.
According to her, the increasing price of gold had no effect with the demand here. Gold bars, which usually come in 10 grammes, are also not popular with locals, she added.
The Bulletin has learnt that the price of gold set in the country is reviewed by the government on a monthly basis and has to follow a cap that is determined by the average international gold price.
Meanwhile, a financial analyst from an international bank operating an office here said there are a few investment plans linked to the performance of the gold market available but only a few are available in the local market.
“This is partly due to licensing costs with the Ministry of Finance (MoF) and they (banks or investment companies) would of course want to offer investment plans that are suitable for the locals and that are feasible for their (company’s) profit margins,” he said.
He added that they have seen an increasing trend of Bruneians opting for gold-linked investment plans, as information about their performance is generally easy to obtain.
He said: “Bruneians don’t generally like taking big risks when investing so they would prefer investing modest amounts when it comes to other investment plans but for gold-linked investments, we have seen a significant number of investors putting in a lot of money.
“Although it is not capital secured, returns can be exceptional and the gold’s robust performance over the years has gained it a very good reputation.
“Then again, it is also up to customers to decide which investment plan would suit them the best because our financial planners and investment specialists would only have the right to offer and explain things such as the expected returns and associated risks that come with it.
“Generally, an investment with a higher risk can potentially bring greater returns, while those with lesser risk can potentially bring lower returns.”
He said gold-linked investment plans available in the country include unit trusts and bonds which are linked to the performance of the commodity. “Unit trusts are more flexible as they can be redeemed anytime, while bonds can only be withdrawn after a certain period of time,” he explained.
Those who generally take up investment plans with the bank, he said, are the more affluent middle-class customers because they are more exposed and knowledgeable of the market.
However, he was quick to add that this does not mean that people with lower income cannot make investments.
“There are a lot of investment options available out there to suit each and everyone’s needs.” he said. “One should not be hesitant to meet financial planners and investment specialists at local or international banks here to find out more about available investment plans.”