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Friday 20.10.2017 | Name days: Leonīda, Leonīds

Latvia turns into gold exporting country

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Lombards and jewelry makers are purchasing gold, in order to sell it abroad, that way turning Latvia from a  gold importing country into a gold exporting one.

People who used to wear rings, earrings and chainlets are in desperate need of money, whereas in other parts of the world people want the exact opposite – to turn their free assets into gold.

This coincidence of circumstances has made the owners of lombards and jewelery makers instead of the signboard «selling gold» hang out the opposite – «buying gold», reports the newspaper Latvijas Avīze.

Since the beginning of 21th century, the starting price of gold in world market has been increasing all the time and along with them – Latvian gold purchasers’ offered sum of money.

«For items of gold that have been bought a few years ago for price of 500 dollars per ounce or 11-12 lats per gram, now can be purchased for the same money. Moreover, they are no longer sold as jewelry, but as inferior gold scrap,» says the head of Latvian Alloy Bureau Peteris Brangulis (Pēteris Brangulis).

This situation is beneficial for gold trading enterprises to whom purchase of precious metals has become a business that allows to survive, because the domestic demand for gold has declined by 60%, informs Brangulis.

Once the exported gold scrap has reached foreign refineries, mostly it is transformed into investment gold – bars and coins, after which the world demand continues to grow, explains gold investment trading company’s Goldinvest Asset Management owner Peter Avotins (Pēteris Avotiņš).

It is cheaper to export gold outside Latvia, because exports are not subject to value added tax, informs gold investment company’s SIA Tavex Board member Evita Grundberga.

The advertisements of lombards promising to lend money against gold or to buy it, are colourful and impressive, although the lombards mostly are not willing to reveal their further actions with the gold.

No matter how many intermediate chains the purchased gold would go through, in the end it still goes to Switzerland and Australia, considers the manager of Barona Lombards Mareks Palivoda(Mareks Paļivoda). «We do not transport gold abroad ourselves, we are too small for that; however, Lithuainians come to pick up gold from us. They enter every day and ask for gold.» Approximately a year ago gold was much cheaper in Latvia than in Lithuania; however now, if there is a difference – it is very small, tells Palivoda. Also gold collectors from Poland tend to come to Latvia in quest for it. Some lombards resell it to gold investment companies Tavex and Goldinvest Asset Management. These are not large quantities of gold, though.

As in other fields of economics, also the processes in gold market are cyclical. The boom of purchasing gold in Latvia could last approximately for a year more, «until the moment those who have financial problems will have solved them or, the other way round, in dealing with difficulties they will have sold all of the gold and there will not be what to purchase. Despite this, there will always be gold collectors,» states Brangulis.

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