The gold trade boasts a devoted following in many parts of Asia, but in boom cities such as Bangkok and Singapore, fast growing money markets are attracting increasing numbers of investors to high finance alternatives.

          In Kampuchea with its history of conflicts, right-wing coups and communist takeovers, gold has maintained special significance. It is regarded as both a staple currency and comprehensive insurance policy by the majority of the population.

          The importance of the aesthetic value of gold as ornamentation is also evident in the number of intricate chains and bracelets one sees worn in the streets of Phnom Penh.           Such fortunes that can be worn, or transported with ease, and meanwhile appreciate in value are the “only sort of fortunes one wants to have in this country, for good and bad reasons,” said one Western economic analyst in Kampuchea.

          On the negative side, there are fears that the scheduled Vietnamese troop withdrawal by the end of this month may lead to civil war. The more positive view follows recent economic reform in Kampuchea. The clear message in Phnom Penh is that money now can be made, and gold plays a major role.

          One gold trader in Phnom Penh estimated that well over four or five million dollars worth of gold is coming in and going out of the country every week—much of it coming from Vietnam and going to Thailand.

          With a great deal of political uncertainty still in store for Kampuchea, the gold trade is assuming even greater importance, as people look to the past for lessons in the future.

          In the years after the Vietnamese invasion toppled the Khmer Rouge from power in 1979, the most frenetic Kampuchean gold markets were among the makeshift huts and plastic tents of the refugee camps along the Thai-Kampuchean border.

          Back in Kampuchea, throughout nearly two years of financial chaos in the wake of the Khmer Rouge rule, those who were fortunate enough to have gold or international currencies were able to barter for goods and services.

          Some who were not so lucky either perished during Khmer Rouge rule, or were simply evacuated too abruptly from their original homes. Their private stashes, hidden under floorboards, bricked into walls and cemented into statues, have been one source of personal gold hoards brought out for sale in various gold stalls.

          In today’s gold markets around Phnom Penh, the occasional exquisite pieced can still be found, alongside vestiges of old family treasures.

          But whether Kampucheans buy gold for ornamentation and life-time investment, or buy merely for big-ticket purchases such as VCRs, motorbikes and even apartments, the precious metal is still regarded as the number one hedge against political uncertainty and inflation.

          A tour through the rambling capital of Phnom Penh is enough for the visitor to see how integral gold is to daily life in Kampuchea.

          In the market places of the city, gold is openly traded from glass-fronted display cases. At each stand, behind uniform sets of scales and high stacks of bank notes, lie thick chains, earrings, and other forms of jewelry and delicate gold leaf. Traders sit behind their stands, invariably alongside fruit and vegetable stalls, bicycle shops and other stores. They compete for business as Kampucheans crowd in. Some come to see their personal treasures while others arrive with wads of the country’s currency, riel, to buy gold.

          For the more practical minded, the most common form of gold for business transactions is in CHI. One chi weighs about 3.75 grams. The thin gold chi slabs commonly bear markings which read:”Saigon-Hong Kong; Hanoi-Phnom Penh” and carry Chinese characters.

          They are currently sold for around 9,000 to 9,300 riel. At the going black-market rate of 190 riel to 1 U.S. dollar, the price is around 47 to 50 U.S. dollars. The official rate of exchange, around 155 riel to the dollar, has remained comparatively stable over the past year.

          Government officials are anxious to restore confidence in the currency and the banking system.

          “If we want to control the market for gold and hard currency, we have to consider the export-import factor--especially in the private sector. We can see of course that the price of gold and hard currency go up and down according to the need for consumer goods,” said one banking official in Phnom Penh.

          In a potential model for the Kampuchean gold trade, 100 or so sellers were officially organized in government-li-censed shop stalls in the domed “New Market” in Phnom Penh in January this year.

          Several of the traders estimated their turn over about 4,500 to 5,000 U.S. dollars per day, representing an average of about 100 chi a day. Eventually, they said, they would expect the government to introduce a tax on gold sellers, “but certainly not yet, I hope,” remarked one woman gold trader.

          There are government plans to gradually bring further controls on gold trading, according to spokesman of the government-run banking and finance sectors. But in full recognition of the stabilizing role gold-trading has played in the past, and continues to play, the moves will be “very, very cautious,” said one senior government advisor.

          “We are thinking of taking control of the gold market, but this takes time because gold here is not just an article to sell, it’s also a means of payment, it makes it very difficult to control,” explained Foreign Trade Bank Director, Tal Nay Im.

          One government policy is to build a stable, capitalist-style banking system and to encourage business people to deposit currency into accounts by holding up interest rates. With unofficial cross-border trade thriving between Kampuchea and Thailand, business is estimated to run into millions of dollars a week. Items such as motorbikes, consumer electronics, cars, clothing and luxury items are generally shipped in by sea from Thailand – similarly, goods from Singapore are in high demand in Cambodia.

          A flourishing community of Phnom Penh-based traders then dispatches a proportion of goods to Vietnam – either by river or by land. Much of this business is transacted in gold, particularly with Vietnam. Cambodian traders then either pay their Thai creditors in gold, or exchange the gold into hard currency.

          A portion is kept in local currency, to be paid to Kampuchean authorities in duties and taxes. Import duties range from 15 percent to 30 percent for motorbikes. It is this portion of local currency which is now being deposited in banks according to Tal Nay Im, who noted a gradual but steady increase in deposits.