THURSDAY, February 29, 2024

Gold maintains its glitter for Thai retail investors as safe-haven asset

Gold maintains its glitter for Thai retail investors as safe-haven asset

Thai investors still prefer to invest in gold as a safe-haven asset, but most first-time buyers are not able to find an affordable way to purchase gold, the World Gold Council said.

Andrew Naylor, regional CEO Asia Pacific (ex-China) and Public Policy at the council, told media in Bangkok that Thailand has a sizeable and active gold market. Gold is the second most popular investment in Thailand and is owned by more than half of retail investors.

"Our ‘Retail Gold Insights: Thailand’ report provides information on Thai investors' levels of investor maturity, investment appetite, and purchasing habits. Our analysis explains why gold is popular with a variety of investors in Thailand, with one major factor being gold's function as a hedge against political or economic risk," said Naylor.

According to the report, the majority of respondents, or 57 per cent, stated that the desire to reduce risk is what drives people to invest in gold.

Gold maintains its glitter for Thai retail investors as safe-haven asset

This demonstrates an apparent understanding of gold's significance as a safe haven among retail investors in Thailand, which is related to its principal function in a portfolio as a measure of wealth protection, Naylor said. 

More than 80 per cent of each retail investor segment agrees that gold is a good safeguard against periods of political or economic uncertainty.

The report also discovered that more than 40 per cent of investors had purchased gold investment products in the year before to the poll.

 More than 30 per cent of investors own gold in this fashion, making gold bars the most common form of gold investment. Gold coins came in second at 12 per cent, followed by ETFs [exchange traded funds] at 10 per cent, vaulted gold at 9 per cent, and exquisite gold jewellery at 9 per cent.

Naylor noted that Thailand's strong recovery from the global pandemic and longer-term economic fundamentals have fuelled a desire for gold that has enormous investment potential.

"Our data clearly shows investors’ appetite to hold gold as a safe-haven investment, but there are opportunities to grow awareness on specific areas through education," Naylor added. 

A World Gold Council analysis found that there are various obstacles for prospective gold investors who are interested in making their first investment. 

Nearly 80 per cent of these potential investors said they lack the knowledge necessary to buy gold, including an understanding of inexpensive possibilities, with the perception that gold is "not affordable" being the biggest obstacle.

Meanwhile, nearly half of the respondents have doubts about the integrity of gold goods.

More than 30 per cent of respondents claim that their hesitation to purchase gold is a result of their concern about doing so. More than 10 per cent of people claim that uncertainty about the purity of the gold deters them from purchasing it.

Besides, more than one-third of investors who are considering investing in gold for the first time don't think they can keep it secure. These potential investors might simply not be aware of the options and services for gold storage.

In addition, the study reveals that 73 per cent of gold products were bought offline. Yet, when asked which product options would be most important, the ability to sell or liquidate gold easily, the ability to buy anytime and the ability to earn interest on gold, ranked on top.

Whether provided by banks or other providers, digital gold products would enable a more integrated and smooth marketing and purchasing decision process.

Naylor said that Thai investors are knowledgeable and active, investing an average of 35 per cent of their income across 3.5 different investment products.  

They see themselves as experienced investors eager to investigate alternative investment vehicles for rapid growth.

Eighty-seven percent of Thai investors concurred that it was crucial to have a diversified portfolio that safeguards wealth, he continued. Thai investors have concerns about the potential effects of financial market collapses, and invest with a long-term perspective in addition to the requirement to comprehend the items in which they invest, he said.