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KOTA BHARU: In a backroom workshop in Malaysia, goldsmiths with torches and chisels sit at wooden desks as they melt and mold precious metal into sparkling jewelry.
Demand for the safe haven product has exploded during the COVID-19 pandemic and not only professional investors are taking advantage, but also small businesses.
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Gold has slumped as hopes for vaccine releases grow, but analysts say the economic recovery will be uneven and gold will remain a safe bet for some time. (Photo: AFP / Mohd Rasfan)
The Makmur Gold company, which is based in the northern state of Kelantan and mainly makes jewelry, has enjoyed good business this year even as the Southeast Asian nation’s economy went into recession.
“We have seen good developments: during COVID-19, our sales were much better,” company director Muhammad Nur Hisyam Che Mahmood told AFP.
Demand for gold, a safe haven product, has exploded during the coronavirus pandemic. (Photo: AFP / Mohd Rasfan)
Gold rose this year as the pandemic accelerated and equity markets tumbled, hitting a record high above $ 2,000 an ounce in August, though it has since fallen back to about $ 1,800.
Makmur Gold posted strong sales of around RM80 million (US $ 19.5 million) over the past eight months, as buyers sought to park their cash in a safe place.
The company sells products directly to customers from its four outlets, as well as online, offering items ranging from bracelets and rings to tiny gold bars.
Most of its gold is obtained in the form of jewelry from a small number of suppliers in the country or bought second-hand from customers, before being melted down and transformed into new products.
GOLDEN FEVER
In addition to regular customers, the company has agents who sell on its behalf and then keep a portion of the profits.
One such agent is Tuan Zubaidah Tuan Abdul Rahman, who earned half a million ringgit (US $ 120,000) in sales over three months of part-time buying and reselling gold jewelry.
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“People are seeing that instead of keeping their money in the bank, it is better for them to buy gold,” said the woman, who is also a teacher.
Malaysia’s gold shops have doubled or even tripled their sales, according to the president of the Malaysian Federation of Jewelers and Goldsmiths Associations. (Photo: AFP / Mohd Rasfan)
“People can use it and it can be a valuable asset.”
Nurse Nor Fazilah Jamaludin said she sold gold jewelry during the pandemic to increase her income.
“Women will buy them for beauty, but the benefit of buying gold is more towards our investment for the future,” he told AFP.
Malaysians began rushing to buy gold in May when authorities allowed companies to reopen after a six-week virus lockdown, said Steven Siow, president of the Malaysian Federation of Jewelers and Goldsmiths Associations.
People had extra money after not spending much for a while and due to a six-month government moratorium on paying off loans meant to boost the economy, and gold shops doubled or even tripled their sales, he said.
The price of gold has fallen as hopes mount that vaccines will be launched soon, but experts believe that the global economy is facing a patchy recovery and the precious metal will remain a safe bet for some time.
“Gold, in any crisis, would be the key asset to consider,” said Yeah Kim Leng, an economics professor at Sunway University Business School.
