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ResourcesThailand Real Estate & Property LawTitleThai Gold Versus International Gold: Issues of Fungibility

Thai Gold Versus International Gold: Issues of Fungibility

Transcript of the above video:

As the title of this video suggests, we are discussing Thai gold and International gold. We are comparing and contrasting and talking about the issue of fungibility. 

I will get to fundability here in a moment but just to provide some context, provide some parameters as to what we are talking about, when I say International gold I mean International standard weight and measure.  That tends to imply or I should say it does imply 99.9% purity and we generally will see this in weights and measures and things like ounces or grams or kilograms associated with gold in an international context. Thai gold uses the Baht weight and measure. It is pretty radically different in terms of the fact that it is a different weight and measure. For those who are interested in learning about Baht weight, we made another video on this channel. We urge you to check that out. What should be taken away from this video is that Baht weight is a different weight and it is a different measure, most notably it is 96.5% pure gold in a Baht weight gold.

Now folks sometimes tell me, they say "well that doesn't seem to be as good" for lack of a better term. Well in the sense of purity no it is not as pure but it is its own weight and measure. For those who are unaware, like the US Constitution gets into the notion that Congress has the power over weights and measures. So Congress could have set a different thing besides an ounce. They could have said you know coinage was in some sort of penny pounds, or some kind of different way of weighting and measuring precious metals. So there is context for this. It has not been something that has come up rather recently but Thailand uses a different weight and measure in their Thai gold system to basically measure the purity and the content of gold. Now people ask me, “why would that be a good thing?” Well in many ways it can be a very good thing. Now I would say that it is going to be contextual. Folks who do not have any connection whatsoever to Thailand, Thai gold may not necessarily be something that you would be interested in but for those who do have some for lack of a better term, center of gravity or orbit to Thailand, Thai gold can be very interesting, indeed for many people for many purposes. 

One thing I find interesting with respect to the issue of Thai gold is the issue of fungibility. What does fungibility mean? Well as defined by Investopedia,, "Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Fungible assets simplify the exchange and trade processes as fungibility implies equal value between the assets." I bring this up because the Thai gold system, the Thai Gold Traders Association, basically when you see gold shops here in the Kingdom and they are ubiquitous, you will see Thai gold shops all over the place, in many different cities; many different locations; almost every town, even village is going to have some form of a Thai gold shop, oftentimes it is my understanding that they pretty much are all going to be members of the Thai Gold Traders Association. They maintain a certain standard with respect to weight and measure of Thai Gold. It also should be noted that if you go and deal with them during their regular business hours, fungibility is a key to the Thai gold system and you should be able to go to a given Thai gold shop and exchange cash for gold or vice versa; it should be fully fungible during the hours of them being open. This is very different than perhaps other places around the world where it may not be particularly easy to convert gold into cash, into liquidity at the drop of a hat. So for this reason fungibility is a major issue with respect to the issue of Thai gold and one that I think many people often overlook when looking at Thai gold in a general context.