JEWELLERY retailer and manufacturer Habib Corp Bhd does not see a substantial surge in demand for its gold products nor a sizeable rise in the price points of his products in view of renewed interests by investors and consumers to hedge gold against equities and bond markets, based mainly on geopolitical concerns.
Meer Habib, managing director of Habib Corp Bhd, said the reason his company could maintain steady prices during volatile times was due to his formula of “buying and replenishing the same amount of gold that was sold.”
He added that hiking its prices for gold products might result in two negative consequences.
“It will deter consumers from buying as they will wait for the prices to go down first. This would certainly affect our sales. There will also be buyers willing to pay high prices for speculation,” he said.
“There will be no speculation on gold prices at Habib because we are in the business for the long term,” he asserted. He will maintain his stock of gold at 20% of the total and does not have any intention to increase that stock.
On the possible rise in costs of transportation and insurance, he said these costs would increase slightly but would not affect the company's profitability or cause an increase in product pricing, as both costs were negligible.
He said the cost of labour, which constituted 2% to 10% of the product cost, would not be affected as well.
“We have seen steady sales of our gold products for the past few months and anticipate this trend to continue into the year,” he added.
He also does not foresee Malaysians rushing into the bullion stampede.
Habib said the bullion had always been a safe haven during troubled times. However, he cautioned that due to nervous investors, gold prices had been volatile.
He noted that its recently launched “purchase back” campaign for consumers to trade in any unused or old gold for cash or product exchange would prevent the leakage of the ringgit from the country.
The trade-in gold is melted and reproduced into new jewellery pieces. By doing this, it would prevent Habib from buying more gold from abroad.
Albert Cheng, World Gold Council managing director (Far East), said gold prices had risen 25% in 2002. Last month, it rose as much as 10% to 15% from the previous month.
“The war is the trigger but I see there is a general demand or growing interest in gold. We have identified people who are no longer comfortable with equities, properties and bonds,” he said, and expected the Asian gold market to be lively this year.
“Gold in Asia is in pure form (22 carat or 24 carat), which means it can fetch higher value. Therefore, there will be more people trading the commodity. In the US, gems and coloured stones (with 9 carat or 30% gold) are favoured and would not carry much value in terms of gold,” he added.
Gold prices soared to US$376.50/ounce, its seven-year high, last Tuesday.
As of November last year, Malaysia's official world gold holdings stood at 36.4 tonnes with a 1.1% share held in gold of total foreign reserves, according to the World Gold Council.
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