Jewellers may have to resort to new strategies to attract and maintain retail buyers of their products in view of the launching of the first ever gold futures market in Malaysia.
The market will give buyers an alternative platform to buy gold for investments, says Goldsmiths and Jewellers' Association of Malaysia deputy president Ermin Siow.
He said jewellers may have to evaluate the impact on demand for gold jewellery and come up with new strategies if the gold futures trading affected their business.
"We may see some effects in terms of demand and sales but it all depends on the participation of retailers in the futures market. On our part, we may have to re-strategise our business a bit to cater for the changes," he told Bernama on the sidelines of the Gold Futures Contract launch Thursday.
Siow said customers buy gold jewellery not only because of the price but also due to convenience as it is easily accessible, besides owning it physically.
"Although it is possible to exchange the futures contracts with physical gold, I believe only a small percentage of futures players will do so as they are a different type of players compared to players in physical gold market," said Siow, who is also the executive director of Poh Kong Holdings Bhd.
Meanwhile, Bursa Malaysia Derivatives Bhd chief executive officer Chong Kim Seng said this new gold futures market, which will see contracts denominated in ringgit, is designed to also attract retail markets as the price offered per contract is considerably affordable to retailers.
He said refiners and jewellers are also encouraged to invest in this market as the instruments on the futures market could be used to hedge against the volatility of gold prices.
Chong said interest remain high in gold-related investments despite many complaints by retail investors on questionable gold investment schemes that have resulted in lots of investments and savings being lost.
"These concerns are real and need to be addressed. What have been showed is the active retail interest in gold investing and trading.
"At the same time, there is lack of trust and regulated market platform for retail market participants to safely participate in," he said.
He cited a questionable gold scheme run by a company that has a big investment totalling RM5.5 billion, with 35,000 investors participating in that scheme. -- Bernama