A recent news article by Malay Mail revealed that Malaysians are turning to pawn shops to sell their gold as inflation rates increase and everything in the country gets more expensive. With Malaysian gold selling above international prices at myr314 per gram, it makes sense that many are ready to part with their spare pieces of gold jewelry.
For example, 43-year-old Noraida Razak told Malay Mail that she sells her gold jewelry to pawn shops every few months to afford basic living items, like a laptop for her children. As Noraida has faced increased living costs, funding something like treatment costs for her special needs brothers or aging mother has become increasingly challenging, but her gold assets offer her fast cash whenever she urgently needs funds.
“Everything is expensive right now. Plus, my savings also are diminishing,” Razak told Malay Mail.
Many Malaysians have recently adopted the same strategy as Razak. Nurul Fareha Aziz Samsudin, a resident of Shah Alam, Selangor, explained to Malay Mail that pawning gold provides a far easier solution than applying for a loan. All people have to do is pay broker fees rather than wait through loan application periods, meet various qualification requirements, and pay high interest rates over short periods of time.
“If I only want a small amount, I can pawn rings. If it’s a big amount, I can pawn the bracelets or necklace,” the 34-year-old explained to Malay Mail.
Pawn shops continue to gain popularity in residential and commercial neighborhoods as more Malaysians have realized the potential their gold jewelry holds. Now, many neighborhoods have their own pawn shops, so people don’t have to travel far to get quick cash for their gold rings, bracelets, and other items. In some districts, you can find two pawn shops on the same street, directly facing each other.
According to Datuk Seri Meer Sadik Habib, the executive chairman of Habib Group (which owns Habib Jewels and Ar-Rahnu Express), gold prices have increased by 52% in the last 10 years. Meer believes now is the right time to be in the business of gold trading. Habib Group accepts all forms of gold, including damaged products, at fair prices without any interest rates.
“We accept gold bars jewellery, whether old or even broken, and our team of experts will consult and evaluate the items, taking into consideration several factors such as weight, purity in example, 22K or 18K and the current market price of gold,” Meer explained in an email interview with Malay Mail.
Habib Jewels and Ar-Rahnu Express typically melt down any pawned items to be transformed into new jewelry products. How much someone can get for their gold jewelry typically depends on the product’s purity.
Meer explained that traditionally, families held onto gold jewelry as heirlooms or keepsakes. Because of this practice, it was looked down upon to liquidate gold gifts for financial purposes, such as debt repayment or investment opportunities. However, today, many people in Malaysia have separated the tangible items from their pasts, understanding the value of using the assets at your disposal.
“Nowadays, people recognise the practicality of selling assets during times of financial need. I see people being more and more accepting of liquidating their assets for whatever financial needs they may have,” Meer explained.
In the last 13 years, Ar-Rahnu Express has grown from a single storefront in Ampang to 13 locations across Malaysia. The store aims to reduce the financial burdens that many Malaysians are facing right now amid rising inflation rates. After COVID-19, for example, Ar-Rahnu experienced an extreme spike in customer levels as Malaysians flocked to sell their gold for financial assistance.
“People were looking to pawn their gold items or get micro-financing assistance to get rolling capital for their businesses, finance their personal or family’s education, pay off hospitalisation fees (for those who did not take insurance), and for emergencies,” Meer explained.
Another pawn shop in Padang Jawa, Shah Alam, explained to Malay Mail that they typically see around 600 customers per month, on average. Last month, though, the shop saw around 800 customers as gold prices spiked with the economy continuing to dwindle. Numerous pawn shops around Malaysia likely experienced the same surge in business.
The increased popularity of pawning gold in Malaysia provides a good look at how the greater gold industry is trending right now: People are willing to part with their beloved gold products because the precious metal is performing so well. As always, traders should consult their financial advisors before making any investment decisions.