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As the title of this video suggests, we are discussing Thai gold. Very rare do I get an opportunity to cite somebody over on Twitter that I really enjoy their stuff but over from VBL's Ghost, this is Vince Lanci and we are going to go over to his Substack as well in doing the citations here, but I initially found this over on Twitter under the headline: Why Thailand is Targeting Gold Speculators to Save Exports. Quoting directly: "Thailand implemented restrictive regulatory measures on retail gold trading effective March 1 to diminish speculative activity and mitigate the appreciation of the Baht which has negatively impacted the nation's export and tourism competitiveness."

Now going over here to VBL's GoldFix.substack.com, under the title: Why Thailand is Targeting Gold Speculators to Save Exports. Quoting directly: "Thailand implemented restrictive regulatory measures on retail gold trading effective March 1 to diminish speculative activity and mitigate the appreciation of the Baht which has negatively impacted the nation's export and tourism competitiveness. The Bank of Thailand introduced a daily limit of 50 million Baht for individual online gold transactions denominated in the local currency" - for those who are unaware, that would be somewhere around 1.5 million dollars in online acquisition of Thai Gold - quoting further: "in the local currency while requiring full upfront electronic payments to eliminate nominee accounts and short selling. Central Bank officials stated that the Baht has appreciated approximately 9% over the past year, making it the second best performing Asian currency and prompting concerns regarding dollar sales linked to gold transactions." Yeah, meanwhile, you'll have these folks in the Bangkok Post and elsewhere telling us all how weak the Thai economy is and all of this good stuff.

Look, I understand the strengthening of the Thai Baht has implications for exporters and the tourism sector by the way, and they do have negative implications, but in the current environment in which we are in economically at least internationally, this is kind of to my mind one of those problems you want to have because Thailand has if you will dry powder now to make policy determinations regarding the Baht; if they want weaken it, try to weaken it. Meanwhile, frankly high demand for the currency means there is high demand for activity within the economy. Again, in many ways it is an issue but it's also one of these sort of problems I think you kind of want to have, as opposed to the opposite being your currency isn't in demand at all, and you are not interacting economically with the rest of the world. That would be a far worse thing and quite frankly, many jurisdictions out here in Asia, as well as in the global South and going over into Africa have these kinds of problems and quite frankly, all things considered, again it's not an unmitigated perfect place to be, but Thailand is standing in a pretty positive position all things considered. 

That said, quoting further: "While the new framework exempts United States dollar-denominated trades and physical shop dealing, it aims to decouple the currency from bullion price movements following a surge in the 60-day correlation between the two assets." Yeah look. Thai gold is its own weight and measure as I've discussed in other videos - it makes it unique - but gold generally has been on the upswing for some time now and quite frankly, I don't even think it's on the upswing, I think we're talking about super cycle levels here. But that said, clearly Thailand, and officials here in Thailand, want the currency to be a little bit more flexible, especially in terms of keeping exports competitive. So I can understand where they are trying to make some moves to try to get to that outcome. 

That said, quoting further: "The monetary policy committee noted in a Wednesday statement that the currency strength has tightened financial conditions for domestic exporters facing thin profit margins. Analysts have observed the Baht trading near 31 per dollar, a level that historically triggers increased regulatory scrutiny to counter excessive currency strength. The measures reflect broader efforts by policy makers to address exchange rate volatility through targeted commodity market intervention rather than" - and this is interesting - "rather than traditional monetary tools alone."

Now, some folks including an acquaintance of mine Michael Yon, had asked me before, in fact I talked about this with Doug Casey too in the past, where we were talking about why it was so important that Thailand has its own weight and measure for gold. This is one of those examples because instead of doing what we would call standard monetary policy manipulation if you will, Thailand is in the very enviable position in my opinion, of being able to do this, again as they say, "through targeted commodity market intervention rather than traditional monetary tools alone." Vince Lanci, talk about a guy who gets it, he gets it. This is a really discreet point. It's something I've been talking about for a while and everybody just kind of, you know there's that sketch - I think I may use this for the thumbnail - it's a sketch from SNL, Saturday Night Live, it’s Washington's Dream and his dream is weights and measures, a country that gets to set its own weights and measures, and the soldiers sitting around were like, "weights and measures sir? Why is that important?" Well, again it may not be important every single day of the week, but this is a perfect example of why it is important. Thailand's own unique weight and measure of gold is allowing Thailand to do things to shore up her own economy, maintain her own sort of, I guess you can call it sort of economic autonomy, while also trying to gain the benefits of whatever benefits can be accrued out there from the current circumstances, and she's able to do it without anybody saying, "oh you're manipulating your currency!" No, there's commodity market intervention. Different than currency manipulation.

So just an interesting data point and one yet again where the issue of Thai Gold, I think 5 years ago folks saw that as something almost not worth even really much mentioning, whereas now in the current state of the economy, especially globally, the way supply chains are moving and things, Thailand's unique geo-political position, along with the fact that Thailand has this unique weight and measure of gold, it's a situation where you can see the sort of unique novelty of the Thai economy and how Thailand can use its own set of tools to deal with economic concerns in such a way that they can basically - I hesitate to say play both sides, that's not really what's going on here - but Thailand can pursue her own natural interest without causing tension to her trade counterparts.