Gemstones are Thailand’s second biggest export line, after garments and before rice. In 1990, the country exported gemstones for approximately 1.5 billion US Dollars. More than half of the worlds quality rubies come from Thailand, mainly from the region bordering Cambodia (rubies from Cambodia also find in substantial numbers their way to Thailand). In the Thai provinces of Chanthaburi, Kanchanaburi and Phrae, blue sapphires are mined. Zircon and garnet are other gemstones found in Thailand.
Thailand is a good place to buy gemstones - principally for those who are big timers in the gemstone trade. Whether it’s a good place to buy gemstones retail is debatable. As a matter of fact, a large number of unsuspecting tourists get burned when buying gemstones in Thailand.
First, there are the clear frauds in which the 'stupid' tourist is just sold some glass beads.
Second, there are the incidents when the tourist just gets low quality stones while having paid for top quality stones.
Third, when tourists actually get good quality stones, they often do so at best for prices which are not lower than those paid anywhere else in the world, or worse, for prices considerably higher.
Gemstone sales of the first and second case are usually conducted by con artists. They make friends with foreign visitors and after a while come up with a story that they have some relative in the gems trade, and accidentally, an "extremely good chance" is just existing to make a small fortune. As the con artists word it, it always seems to be a chance tailored for foreign visitors - but of course the only one who will finally make a small fortune is the con artist and his cohorts.
A story presented by a con artist could sound like this: "Because the Thai government has put under state control the export of gems, ordinary Thais cannot export stones by themselves. However, foreign visitors can buy gems and take them home. Because the gem trade is under state control and the government fixes the price for exports through the normal commercial channels, prices for gemstones are much higher abroad than in Thailand. A tourist who buys a few gemstones directly from a good source (the con artist may even indicate that his relative’s gems are black market stones) can easily finance his Thailand trip just by taking a few stones out of the country, walking into any jewelry store back at home and sell the stones for triple the price." There are endless varieties of con artists’ stories. For example, a con artist may claim that his brother has to sell some stones which are old family inheritance because his baby will need a heart operation, and the brother therefore is allegedly willing to sell the stones for far beneath their value. It is reported that some extra stupid tourists have then offered to pay the "real", of course higher price for the stones - and others have, because of the alleged serenity of the circumstances, at least refrained from haggling over the price.
One just has to read the letters to the editors of the English newspapers in Bangkok to find regularly some more varieties of the same old theme.
Of course, all curious claims of con artists are just nonsense. The Thai government doesn’t control the gems trade and imposes inflated prices for stones to be exported. And gemstones are not some exotic novelty or fashion item for which a price is set quite arbitrarily but rather an international commodity for which prices at any time do not differ much from one country to another (though retail shoppers probably pay at home a few percent duty and most probably the full Value Added Tax of maybe 10 to 20 percent - plus the mark up of the retailer).
This is no longer the age of spice traders who made a few thousand percent profit on a sack of pepper brought from the Far East to Europe. Price fluctuations of just some 10 percent between Asia and Europe are a difference on which commodity traders can easily live - in the case of rubbers just as in the case of rubies.
Therefore, all talk of Thailand in general or Bangkok in particular being a great place to shop for gemstones is a myth as far as the ordinary visitor or tourist is concerned. Gemstones are not a bargain here - not for those who buy them retail. Gemstone retailers in Bangkok often operate on mark-ups which are not necessarily smaller than the mark-ups of jewelers in the West.
In contrary, even basically honest gemstone retailers may be tempted to make an unethical profit by setting a mark-up even beyond what the mark-up would be at a tourist’s home country. Definitely the foreign visitor who is on an unknown turf in Bangkok is at a considerable disadvantage when buying in Thailand compared to buying at home. In Thailand, he doesn’t have much time to shop around. He has communication problems. And because of too many new impressions taking his attention he is probably not as alert as he would be in comparative situations at home. This is known also among the jewelry and gemstone retailers in Bangkok, and accordingly when confronted with foreigners who have obviously decided already to buy gemstones in Thailand because they believe that they must be cheaper than at home, they might feel tempted to go for the quick kill, taking the chance to request inflated prices even at the risk that a potential client might not buy from them because there is still another trader who offered a better deal (maybe it may just be a lower quality of stones.)
Foreign retail buyers often don’t fare well when purchasing gemstones in Thailand - not only in cases where they are outright cheated but even when indeed getting what they paid for, though far too much.
Additional reasons contributing to this situation is the wide employment of a commission system. Any foreign visitor who enters any jewelry selling establishment accompanied by a local acquaintance, or who enters a jewelry selling establishment during on a organized tour must be prepared to pay substantial hidden commissions.
Nevertheless, there may be occasional cases when a foreigner buys gemstones at a retail outlet in Bangkok at lower prices than he would at a jewelry shop back home. But even then, the price difference will certainly not make it worthwhile to buy a few gems in Bangkok and to try to sell them back home. The price difference, if any, certainly is not due to a very substantial difference in wholesale prices but to different retailer mark-ups. In the case of a knowledgeable retail shopper, a gems retailer in Bangkok may actually settle for a mark-up smaller than his counterpart in a Western country. But bluffs will not work. The retail shopper has indeed to be knowledgeable.
The Asian Institute of Gemological Science (Tel 513-2112, 513-7044 to 5) offers a one week course on gemstone identification at a price of 4,850 Baht (no gems included, but a text book). The course does not turn a amateur into a specialist and gems trader.
Those contemplating converting money into gemstones should be aware that gemstones are particularly unsuited as commodity investment. Unlike in the case of gold and silver, the value of a gemstone cannot simply be determined by weighting it. To many other factors play a role, size, shape and even how healthy Western economies are at a given time. For gemstones except diamonds are marketed almost exclusively as jewelry.
Even the Asian Institute for Gemological Science from which certificates attesting to the genuineness and quality of any particular gemstone are available at 599 Baht if one can wait a week for the report or at 999 Baht if one wants it faster, refrains from putting a value tag on stones. They are worth just the amount one gets for them when reselling - making the sales skill of the vendor an intricate part of the value of any gemstone.
The ordinary visitor should buy gemstones only if he or she fancies them for his or her own adornment or as a gift. He or she should certainly not buy them with the intention to resell them at a profit because that profit will not materialize. And he or she shouldn’t even buy them as an investment.
Contrary to what is the case in gems, there is much less danger of getting burned with gold. Actually, the buyer of gold has a far better control over the pricing of gold jewelry in Thailand than in the West. This is because the price of a piece of gold jewelry in Thailand clearly is made up of two components: the price of the metal and the charge for the workmanship that went into a piece.
Gold jewelry, therefore, in general is a sound investment, and actually, many Thais and Chinese invest their savings in gold. Thailand has it’s own unit of measurement for gold, called Baht like the currency.
One Baht of gold is 15.16 grams. A troy ounce, internationally used to weigh gold, has 31.103 grams. A Baht weight therefore is equivalent to .487 troy ounces.
Many of the gold ornaments sold in Thailand contain exactly one, or exactly one half Baht of gold. As prices at jewelers are often per weight unit of one Baht, it is easy to assess on a daily basis the value of any gold ornament one possesses.
Gold dealers in Bangkok buy back at any time gold ornaments bought from them or other stores at rates just minimally lower than their retail prices.
On December 2, 1991, gold shops in Bangkok sold one Baht weight of gold for around 4650 Baht (currency), while their repurchase prices were around 4550 Baht. A typical price for the craftsmanship for a gold chain was just around 150 Baht.
The international gold price (mid-rate) for December 2, 1991 was given by the Bangkok Post of December 3, 1991 as 368.25 US dollars. The average Baht / Dollar rate was 25.43. This translates into 9346.59 Baht per troy ounce of gold, or 4551.78 Baht (currency ) per Baht (weight) of gold. The example shows on what minimal profit margin gold shops operate in Thailand. While the international mid-rate for gold was just 4551.78 Baht (currency) per Baht (weight), Bangkok gold shops at that day bought gold ornaments at 4550 Baht (currency) per Baht (weight) and sold gold ornaments at just 4650 Baht (currency) per Baht (weight), at a profit gain of just 100 Baht, or just around 2 percent (plus a fixed charge of just 150 Baht for the workmanship in a gold chain).
But in most Western countries, there is not only a much higher profit margin of the retailer and a much higher charge for the workmanship (not separately indicated) but on top of that often a heavy value added tax of up to 30 percent of the price of an ornament.
Thailand introduced a value added tax effective January 1, 1992. At the time this text was written, it hasn’t been clear in how far the value added tax would influence the gold trade.
Silver
Of silver jewelry there are two kinds in Thailand - those done by regular jewelry workshops which also make gold jewelry, and minority or hill tribe items. A common silver content of items bought in jewelry shops is 92%, indicated by a stamp saying 92. The silver content of silver hill tribe jewelry is often not specified and not known as any melted silver is used in making the items.
Silver jewelry can be bought in Bangkok in jewelry stores and at Chatuchak Weekend Market. A better selection, however, is available in Chiang Mai at and around the Night Bazaar. A favorite item are silver belts.
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