A Palace of Gold Is Sold Off For Its Melt Value, but Not
the Throne By
July 7, 2008
KONG -- At $800 an ounce, the golden bathroom sink had to
go. At $1,000, say goodbye to the golden horse-drawn chariot.
But don't even think about touching the golden toilet.
Global economic uncertainty over the past few years has pushed
gold prices into the stratosphere, and few people have felt
that rise as much as Hong Kong entrepreneur Lam Sai-wing has.
He has spent the past decade constructing a palace of gold,
decked out in six tons of the precious metal. In recent years,
the palace has become an attraction mainland Chinese tour
groups couldn't miss, and a boon for Mr. Lam's retail jewelry
business, Hong Kong-listed Hang Fung Gold Technology.
Since gold prices hit four-digit territory earlier this year,
Mr. Lam has been taking apart his hall of gold as quickly
as he once raced to construct it. He is melting down golden
chandeliers, armchairs and armored knights and selling gold
by the ton to fuel growth plans that include hundreds of new
retail outlets in mainland China. But even with the selloff,
one thing is certain: The toilet stays.
"I don't care if gold hits $10,000 an ounce," Mr.
Lam says. "I'm not melting it down."
As far as Mr. Lam is concerned, the golden toilet is more
than a Guinness World Record-certified, 24-karat, fully functional
Mr. Lam, a former goldsmith, came up with the toilet gimmick
in 2001 as he was pushing his jewelry-manufacturing business
into a fierce retail market. The come-on worked so well that
he quickly added ton after ton to his glittering hall. At
its peak, Mr. Lam's collection included a golden king-size
bed, a 5-foot-8-inch-tall traditional Chinese statue of the
"Guan Yin" goddess of compassion, and the 12 animals
of the Chinese zodiac. He named his 7,000-square-foot display
the Swisshorn Gold Palace.
Obsessed With Gold
As a boy growing up in Cultural Revolution-era China, Mr.
Lam, now 53 years old, was obsessed with gold. He says he
found himself transfixed with one sentence in Vladimir Lenin's
writing: "When we are victorious on a world scale, I
think we shall use gold for the purpose of building public
lavatories in the streets of some of the largest cities of
Lenin's words alluded to a socialist utopia with no need
for money, but Mr. Lam read them as an indictment of the poverty-stricken
existence he found himself in. He rarely had meat to eat,
and after he turned 7, Mr. Lam struggled to help his single
mother and six siblings sell bananas and peanuts.
"Life, it was tough," Mr. Lam said in a recent
interview in his gold-bedecked office, decorated with golden
pillars and statuary.
age 22, Mr. Lam escaped from his impoverished hometown of
Chaozhou, fleeing by foot for nearly a month before swimming
across a river to Hong Kong, he recalls. When he arrived,
Mr. Lam looked up some relatives and got himself an apprenticeship
as a goldsmith. He soon set up a small wholesale jewelry business.
When China began opening its economy in 1979, as part of
a sweeping reform movement, Mr. Lam was among the first to
open a factory there, a jewelry manufacturer of about 100
workers in the southern city of Dongguan. By 1998, Mr. Lam
was readying his company to go public, and to launch a new
"Building a gold toilet, I realized, was the perfect
way for me to put into reality something that has been in
my head since I was 16 years old," he said. Besides,
he added, gold prices were so low they could only go up; buying
gold at $200 an ounce would hedge against inflation. "It
would be like an investment, plus we could let people see
it for an admission fee, and we could use it to launch our
brand," he says.
Not everyone was on board with the plan. His board of directors
balked at the idea, and his friends called him crazy. But
Mr. Lam had his way, and construction -- headed by Mr. Lam
-- began. The toilet became a smash hit.
Mainland Chinese tours made it a highlight on their itinerary,
and before long, the hall was drawing as many as 100 tour
groups every day. The jewelry gift shop -- the company's first
retail outlet -- reeled in about $100 million a year in sales
for the company at its peak, while sales of Hang Fung's jewelry
lines pushed company profit to new highs by 2003. The attraction
even drew Communist officials from mainland China, fascinated
that a capitalist haven like Hong Kong could have realized
Lenin's dream without having first created a socialist utopia.
first time I saw it, I thought, 'How wonderful -- how absolutely
wonderful,'" one recent visitor told a Taiwanese television
crew as he and others crowded around the toilet. "There's
just so much gold everywhere. Never did I think I could see
so much gold, not even in my wildest dreams."
Competitors have set up gold showrooms of their own, but
none as flashy as Mr. Lam's.
Tse Sui Luen, a high-end rival, has constructed its own showroom.
The place has a precision-timed tour modeled after a Disney
World attraction, introducing visitors to the company's founder
(a "sparkling legend") before whisking them by a
workshop of laborers fiddling with custom jewelry under bright
lights and into the gift shop. "You want to keep it like
a tourist attraction," says TSL's chairman, Erwin Huang.
When gold hit $980 an ounce in March this year, Hang Fung
unloaded a ton of gold, and later slimmed down by two more
tons, reaping about $64 million in the process.
"This latest rise in prices has been incredible,"
Frank Wu, Mr. Lam's chief financial officer, said as workers
hacked away at the furniture downstairs. The price of gold
came down from a March 18 peak of $1,003.20 an ounce, to $848.90
on May 1. Since then, it has bounced back yet again, to $925.
This past week, it has been around $880.
If prices rebound, Mr. Wu says, the company will sell more.
But not the commode.
"The toilet and the Guan Yin statue are the most valuable
pieces," Mr. Lam says. "The Guan Yin is a goddess,
and she is to be worshipped. As for the toilet, that's the
cornerstone of our company," located though it is in
the golden bathroom of the golden palace. "It's an icon.
It will never be taken apart."