The State Bank of Vietnam Monday announced the official draft decree on gold trading management, with some additional clauses intended to dispel certain rumors which have been raising public concerns recently.
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The bank’s release of the decree should bring an end to rumors regarding gold trading, while detailing new regulations for the trading system.
Under the bill, a business is required to have a registered capital of at least VND500 billion ($24 million), and have held at least 25 per cent market share in the last three years, to be eligible to produce gold bullion.
Businesses and gold shops have six months to renew their licenses to trade gold bullion as of December 1, when the decree is expected to take effect.
After that time, all gold bullion trading activities can only take place at businesses and credit institutions that are licensed by the central bank.
It also states that although the decree can eliminate some gold bullion processors from the market, all [gold bullion] brand names that are currently licensed by the central bank will remain eligible for circulation after the decree takes effect.
Gold traders said this statement can help stop the recent unprecedented phenomenon in the gold trading market, with some gold bullion producers selling their products lower than the rate of the Saigon Jewelry Co, the country’s largest gold trader.
The “big sale” came after many gold buyers feared that SJC gold bullion would become the only product eligible for circulation on the market once the decree becomes effective, since Saigon Jewelry Co, which holds 90 per cent market share, is the only licensed gold bullion producer out of eight such businesses that can meet all new requirements to continue production.
Many people holding gold bullion of other brands have thus scrambled to sell out, forcing gold bullion producers to cut prices in a bid to cool down trading.
In Hanoi, Bao Tin Minh Chau quotes the selling price of its Rong Thang Long gold bullion at a rate nearly VND1 million lower than that of SJC.
Selling prices of AAA gold bullion produced by Agribank Gold Corporation are some VND700,000 a tael lower than SJC.
In fact, Bao Tin Minh Chau began to sell its Rong Thang Long bullion at a rate lower than SJC gold bullion by VND200,000-300,000 a tael two weeks ago.
Company CEO Vu Minh Chau told Tuoi Tre that the move was made after many buyers, acknowledging the draft decree, had scrambled to sell their Rong Thang Long bullions to switch to SJC gold, for fear of a scenario in which only the latter would be eligible for circulation.
“With sales slumped against the doubled purchases, we had no choice but to cut selling price to ensure liquidity,” Chau said.
“Buying prices will go down accordingly with the lowered selling price, which we hope can discourage customers from selling their gold.”
In another gold development, SJC gold selling prices as of yesterday’s closing session slumped by VND1.5 million a tael compared with the opening session, to VND44.55 million a tael.
The plunge has driven many people and gold shop owners to queue up to buy SJC gold, boosting the company’s sales.
Nguyen Cong Tuong, SJC’s sales manager, said the company sold 4,000 taels yesterday, which was 7 to 8 times higher than usual sales.
Global price of the precious metal retreated to $1,694 an ounce at the closing session.
At the official dollar exchange rate, the gap between SJC and global prices was some VND800,000 a tael.