The bracelet, a memento from her grandmother, had been a family safeguard for over 30 years. However, when she needed 2,000 ringgit (equivalent to over 10 million VND) to repair her car for school runs and prepare for the upcoming Ramadan, the valuable jewelry proved useless.
"I visited three or four shops, and every one reported being out of cash", Aminah sighed.
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Illustration: Straits Times |
Aminah's predicament is increasingly common across Malaysia. Record-high global gold prices have fueled a surge in demand for selling and pawning, leading to a liquidity crisis for pawn shops precisely when households face their highest annual expenditures.
Unlike selling outright, pawning gold offers immediate cash for expenses like medical bills, tuition, or car repairs, allowing individuals to retain their cherished items. Yet, the sharp increase in gold prices has elevated loan limits per unit of gold, rapidly draining the cash reserves of pawn shops.
Experts have also identified a trend of "debt overlapping". Capitalizing on rising gold prices, many customers present old pawn receipts, seeking re-evaluation of their collateralized gold to borrow additional funds based on the increased value. Given the simpler procedures at pawn shops compared to banks, this practice has surged, intensifying cash outflow pressure on shop owners.
Mohamed Fadhil, a Kuala Lumpur jeweler, reported a sixfold increase in customer transactions. Market risks compelled him to invest nearly 40,000 ringgit in a precious metal testing machine to prevent acquiring counterfeit or low-quality gold amidst the chaotic market.
Doctor Ahmed Razman Abdul Latiff, an economist at Universiti Putra Malaysia, observed: "The inability of even pawn shops to provide cash signals an alarming state of household financial health." According to him, this situation is a consequence of a vicious cycle: low wages, increasing living costs, and high borrowing rates. When gold, often the last resort for the poor, becomes difficult to convert into cash, the burden on people's lives intensifies.
By Ngoc Ngan (Source: Straits Times)
