An unstable year for domestic gold

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Báo Tuổi Trẻ English - 33 month(s) ago 3 readings

An unstable year for domestic gold

This year has seen gold in Vietnam priced up by 18 percent compared to last year while the global price has increased by only 11 percent.

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At present, the selling price of gold has increased by as much as VND6.6 million a tael compared to prices recorded earlier this year, which hovered around VND36 million a tael.

Gold once topped the VND49 million/tael mark in late August, an all-time record high.
The price of gold in Vietnam has steadily increased for the last 11 years, making gold the most profitable form of investment, NHDMoney Newswire reported.

Yet, not all investors will manage to reap profits from gold even though it remains a better investment channel than securities and real estate.

Many investors scrambled to buy the metal when its price topped the record high VND49 million a tael.

If these investors are still holding bullions bought at that period, they will suffer a loss of as much as VND7 million for every tael of gold now.

The gap between domestic and global gold prices has increasingly widened this year.

The gap once reached VND4 million a tael, while a gap of only VND400,000 a tael is enough to suggest speculation, according to the State Bank of Vietnam Governor Nguyen Van Binh.

At present, domestic gold is still VND2.5 million a tael more expensive than global gold.
The central bank has continued to come up with ways to stabilize the domestic gold market.

One of the central bank’s efforts is a draft decree on gold trading management aimed to make SJC, the gold bullion brand name of Saigon Jewelry Co., the country’s largest gold trader, a national brand name.

When this new regulation takes effect, SJC will become a monopoly, although gold bullions produced by other brand names such as Rong Thang Long of Hanoi-based Bao Tin Minh Chau, or AAA gold bullions, will be still eligible for circulation.

However, the draft decree has led to an unprecedented phenomenon, in which gold bullions of traders other than SJC were sold at lower prices than SJC’s.

Rong Thang Long, and AAA gold bullions, for instance, were once sold for nearly VND1 million less than SJC bars.

In the last months of the year, the central bank stopped granting traders quotas for gold imports but it allowed SJC and five other banks to form an alliance to stabilize the market.

The alliance, including DongA Bank, Asia Commercial Bank , Techcombank, Eximbank, Sacombank, and SJC, were allowed to reopen international gold trading accounts to help narrow the gap between domestic and international prices.

Though it seemed to be effective initially, the measure later was not strong enough to narrow the gap to a reasonable figure.

Meanwhile, global gold this year experienced the lowest increase in the last 3 years, Reuters reported.

The metal rose by a total of 11 percent this year on the international market, while the figure last year was 26 percent.

Currently, the global gold price dropped by 18 percent compared to the record high of $1,923.7 an ounce in September.

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