1 gram gold bars - who buys them?

[MickB]

I buy 1 gram bars as presents for family members as I usually run out of ideas what to buy them. When they see a 1 gram bar inside their birthday card and realise it's gold they ask how I managed to get hold of it. 

I think most people assume that bullion isn't easy to come by.

[MancunianStacker]

I’m selling 10 x 1/40 oz Britannias 2015 if anyone is interested. They are proofs. Advert is in the for sale section. Thanks! 

[gji25]

1g gold bars are easier to melt than kilo bars lol 🤣

[Ukbullionfan]

9 minutes ago, gji25 said:

1g gold bars are easier to melt than kilo bars lol 🤣

How on earth did you find this thread from 4 years ago just to say that? Lol 

[Silverlocks]

Not sure who buys small fractional gold here, but -

Overseas, the buying power of folks in large chunks of Asia (Indonesia for example) is much smaller than here, so most punters don't have the dosh to buy (say) a 25g or 50g bar.  Also, silver and coins aren't terribly big there so most private holdings are in small gold bars. 

However, the premiums for small gold bars in Indonesia (and presumably many other parts of Asia) are significantly lower than than they are in Western countries.  For example, If I look at a UK dealer, the premium over spot for 1g bars ranges from 24 to 37% over spot where a 1g bar from PT Antam in Indonesia goes for about 16% over spot.  Similarly for 5g bars the premium from the same dealer site ranges from 11.7% to 13.8% but the premium from PT Antam is 10.8%.

It's worth noting that this is not quite an apples-to-apples comparison as gold sales in Indonesia also attract 11% VAT.  However, what we can see is that the premium for 1g bars is much closer to the premium for 5g bars than it is here.  Small bars in the 1-5g range are quite popular in those parts and the market is geared to folks buying bars of that size.

 

Edited August 29, 2022 by Silverlocks

[Roy]

Are the locals buying these bars as wealth preservation/ distrust of banks/ monday morning pawning or all of the above? 

[Silverlocks]

22 minutes ago, Roy said:

Are the locals buying these bars as wealth preservation/ distrust of banks/ monday morning pawning or all of the above? 

Some combination, I think.  Not everybody has a bank account - the majority of folks in Indonesia don't - so stashing a bit of gold under the bed for a rainy day is common practice from way back.

Indonesia is much better set up for being poor in than any developed country as the majority of the population there still live in conditions we would consider poverty.  For example, the local communities are much more close-knit than one would expect here and neighbours go out of their way to help each other.  People will do fund raisers to help folks in need at the drop of a hat.   There's a lot of low tech there - kerosene and little Rinnai gas stoves are still widely used and there will be a warung (little corner shop) selling gas and refilling your bottle of kerosene every couple of blocks.  Staple foods, basic clothes and such like are very cheap, and one can get basic accommodation pretty cheaply.  

In a lot of Asian societies, keeping gold as savings is pretty common practice, and Indonesia is no exception to that.  It might also be said that corruption and some distrust of authority is a not insignificant factor, plus banking infrastructure is not available in every village and many folks don't have their own transport.  That aspect alone means there are a lot more little local shops as folks can't really travel long distances to go shopping.  Even the supermarket chains have many local branches - Alfa Mart, a major Indonesian chain, has something like 20,000 branches.

All that adds up to small size bars being a popular long-term savings medium.

Edited August 28, 2022 by Silverlocks

[Roy]

I didn't realise fractional gold bars were as popular in SEA. I've seen them in the UAE, e.g. Emirates bars, but the link you provided on another thread is the first time I've seen them in assay.

I imagine gold jewellery is still the favoured store of wealth?

 

[StackemHigh]

Gold Nothing smaller than 10g for me!

[Silverlocks]

10 minutes ago, Roy said:

I didn't realise fractional gold bars were as popular in SEA. I've seen them in the UAE, e.g. Emirates bars, but the link you provided on another thread is the first time I've seen them in assay.

I imagine gold jewellery is still the favoured store of wealth?

 

I'm not really an anthropologist, but I think that's more of an Indian thing.  I don't get the sense of that in Indonesia so much.

The premium on a 5g bar is less than percentage point more than a 10g bar on the Logam Mulia web site, and not much more than 1 percentage point higher than the premium on a 50g bar.  I doubt many folks would have enough money to buy bars in the 50g range - the average yearly household income in Jakarta is about 50m IDR (£2,500-3,000) and outside Jakarta or other large cities is more like half of that.  I feel like Twoflower everytime I go there.

Edited August 28, 2022 by Silverlocks

[Roy]

Is the gold price regulated (fixed) by the government?

[Silverlocks]

Just now, Roy said:

Is the gold price regulated (fixed) by the government?

I don't think so per se; the prices of the bars seem pretty much in line with current spot prices..  PT Antam is a SOE that does mining and I think Logam Mulia is actually their online site for retail sale of bullion.  They are LBMA good delivery accredited, however, so I imagine they have to play nicely with international markets.

[Silverlocks]

Given that there's no VAT on importing the gold to the UK, and I presume one could export the bars from Indonesia sans VAT, I suppose it's not inconceivable that one could purchase 1g bars from PT Antam at a price that would make them worth importing here.  However, I'm really not sure what the market for off-brand 1g bars would actually look like in the UK.

Edited August 29, 2022 by Silverlocks

[Happypanda88]

A country rich in resources like Indonesia should be much wealthier than it is now if it wasn't colonized and exploited for centuries.  

Currently where I'm living, there are 150,000 domestics helpers from Indonesia (according to latest local government stats and around 190,000 from the Philippines). A vast majority are women employed as live-in helpers to wash, clean, cook and to look after the young and old. The monthly salary is around £700-800 per month, and normally one free return flight back to Indonesia each year paid by the employer. Those with a good command of English are usually paid a little more as they can also help young children with school work !  

After reviewing the average annual salary for Indonesia, it's not surprisng that many of those less well-off chose to work abroad. Though these days with high tech and ease of communication, they can be in touch with their loved ones at a touch of a button so less of an issue of being homesick. 

Back to gold. I do know that Indonesian domestic helpers do buy gold to take home. All PMs are tax-free here. I have heard stories of some getting into trouble at customs when arriving back at the airport with gold chains, gold rings etc. 

In general, people in the East do understand and value gold far more than those in the West. I suspect if the Indonesians were to have a higher standard of living, then people would hold more gold.  Having said all that, a 1g gold "bar" is definately a No! No! for me. This is unless it is free. Like my local bullion dealer offering a free 1g gold "bar" (Royal Mint Happy Birthday edition) when buying a 1oz gold Britannia (at 4.4% premium).

[CollectForFun]

8 hours ago, Silverlocks said:

I feel like Twoflower everytime I go there.

Big like to you for this unexpected remark - put a big smile on my face!

[gji25]

16 hours ago, Ukbullionfan said:

How on earth did you find this thread from 4 years ago just to say that? Lol 

i was just testing my new googles 🤣

 

[Silverlocks]

So I'm in Indonesia now and I did a little bit of detective work.

A big part of the reason for gold's popularity lies in the influence of Sharia law on the culture, in particular the proscription on usury. Interest-bearing savings accounts are not strictly allowed per Islamic doctrine and sharia banking is quite the topic in its own right.  Keeping savings as gold is common practice in Islamic circles and is apparently prescribed in the Quran as the officially sanctioned way to do it.  Although Indonesia is fairly liberal by the standards of such things it's still widely practiced here.  Thus, there is a lot of trade in smaller gold bars and, because it takes the place of banking for a lot of people, it is subject to state regulation.

Most jewellery shops and various online outfits buy and sell bullion, and there is a state regulated buy/sell price for retail gold traded domestically.  I'm not sure how often it updates - it might be daily but it seems to be less frequent than that.  The gold also attracts 11% PPN (essentially VAT), although it looks as if there might be some discussion about punting this.

The spreads for small bars are also less than those for (say) 1g bars here, and I suspect the production volumes of small bars are much greater than in a typical Western mint.

The major reputable gold producer is a state owned enterprise called P.T. Antam, which is a mining company that produces refined gold alongside various other products.  They sell a range of retail bars at various sizes as well as industrial and good delivery gold products.  They are viewed in Indonesia as being reputable and carry LBMA accreditation, which means essentially that their published assays are accepted.  Given their role in what is essentially a banking system one suspects there would be a major shitstorm if it was found that they were pushing dodgy gold. 

There is also a state pawn shop (for want of a better word) that will take gold as collateral against loans.  In Jakarta there is a weekly auction of collateral on defaulted loans,  which includes gold bars.  There are probably other auction sites but it looks like there isn't one in the town we're living in.

That appears to be what's going on in the retail gold bullion market here.  It's been an interesting little vignette of a different culture and the role of gold in its society and I think I've got a reasonable insight into how to go about doing the Indonesian side of the family stack now.

 

Edited September 7, 2022 by Silverlocks

[Happypanda88]

2 hours ago, Silverlocks said:

So I'm in Indonesia now and I did a little bit of detective work.

A big part of the reason for gold's popularity lies in the influence of Sharia law on the culture, in particular the proscription on usury.  Keeping savings as gold is common practice in Islamic circles and although Indonesia is fairly liberal by the standards of such things it's still widely practiced here.  Thus, there is a lot of trade in smaller gold bars and, because it takes the place of banking for a lot of people, it is subject to state regulation.

Most jewellery shops and various online outfits buy and sell bullion, and there is a state regulated buy/sell price for retail gold traded domestically.  I'm not sure how often it updates - it might be daily but it seems to be less frequent than that.  The gold also attracts 11% PPN (essentially VAT), although it looks as if there might be some discussion about punting this.

The spreads for small bars are also less than those for (say) 1g bars here, and I suspect the production volumes of small bars are much greater than in a typical Western country.

The major reputable gold producer is a state owned enterprise called P.T. Antam, which is a mining company that produces refined gold alongside various other products.  They sell a range of retail bars at various sizes as well as industrial and good delivery gold products.  They are viewed in Indonesia as being reputable and carry LBMA accreditation, which means essentially that their published assays are accepted.  Given their role in what is essentially a banking system one suspects there would be a major shitstorm if it was found that they were pushing dodgy gold. 

There is also a state pawn shop (for want of a better word) that will take gold as collateral against loans.  In Jakarta there is a weekly auction of collateral on defaulted loans,  which includes gold bars.  There are probably other auction sites but it looks like there isn't one in the town we're living in.

That appears to be what's going on in the retail gold bullion market here.  It's been an interesting little vignette of a different culture and the role of gold in its society and I think I've got a reasonable insight into how to go about doing the Indonesian side of the family stack now.

 

 

I trust you brought with you a few grams of gold as gifts to show them your caring side !?  😬

[Silverlocks]

It's easier to buy it here - you get rogered for duty and VAT if you try to bring it into the country and you can rock up to pretty much any jewellery store in Indonesia and buy gold bars at regulated prices.  

 

Edited September 7, 2022 by Silverlocks

[Silverlocks]

On 29/08/2022 at 00:33, Roy said:

I didn't realise fractional gold bars were as popular in SEA. I've seen them in the UAE, e.g. Emirates bars, but the link you provided on another thread is the first time I've seen them in assay.

I think they're also quite big anywhere with a substantial Muslim population because of the sharia banking and savings practices, so it doesn't come as a surprise that you might see them in the Middle East.

[bluffer]

On 28/08/2022 at 23:45, Silverlocks said:

Not sure who buys small fractional gold here, but -

Overseas, the buying power of folks in large chunks of Asia (Indonesia for example) is much smaller than here, so most punters don't have the dosh to buy (say) a 25g or 50g bar.  Also, silver and coins aren't terribly big there so most private holdings are in small gold bars. 

However, the premiums for small gold bars in Indonesia (and presumably many other parts of Asia) are significantly lower than than they are in Western countries.  For example, If I look at a UK dealer, the premium over spot for 1g bars ranges from 24 to 37% over spot where a 1g bar from PT Antam in Indonesia goes for about 16% over spot.  Similarly for 5g bars the premium from the same dealer site ranges from 11.7% to 13.8% but the premium from PT Antam is 10.8%.

It's worth noting that this is not quite an apples-to-apples comparison as gold sales in Indonesia also attract 11% VAT.  However, what we can see is that the premium for 1g bars is much closer to the premium for 5g bars than it is here.  Small bars in the 1-5g range are quite popular in those parts and the market is geared to folks buying bars of that size.

 

thailand, cambodia etc dont buy coins or bars except if they are rich - by our standards. normal folk will buy gold chains, rings, earings etc.