Sun. Nov 27th, 2022

VietNamNet Bridge – The State Bank of Vietnam has authorized the Saigon
Jewelry Company (SJC) to make bullion gold to provide to the market. Declining
to say about the amount of gold to be made, but a representative of the central
bank said a big amount would be marketed to help stabilize the prices.

Vietnam, gold market, price gap, tax, quota

In an official statement released on March 20, the State Bank affirmed that SJC
has been officially assigned the task of make bullion gold. With the SJC’s
capacity of 80,000 taels (3 tons) per day, the supply would exceed the demand in
a short time, which would help narrow the gap between the domestic and the
world’s prices, according to Dau tu.

The State Bank has affirmed that the move, plus the other factors, such as the
stable dong/dollar exchange rate and the downward in the world’s prices, all
will help curb the domestic prices and ensure the reasonable price gap.

Le Hung Dung, President of SJC, has confirmed that SJC is making bullion gold
for the State Bank, but has declined to reveal the amount of gold to process.
Meanwhile, analysts have estimated that SJC has put out more than 10 tons of
gold over the last week. As such, the amount of gold to be churned out by SJC
may reach 20-30 tons by the time when the State Bank officially organizes
bullion gold auctions.

Dinh Nho Bang, Deputy Chair and Secretary General of the Vietnam Gold Business
Council, said on Dau tu that previously, Vietnam imported some 30 tons of gold a
year. However, not the whole amount of 30 tons was converted into bullion gold
and consumed domestically. It was estimated that 1/3 of the amount was used to
make jewelries. Besides, a big volume of the imports was re-exported.

As such, Bang said, the market would see the excessive supply if State Bank just
markets 10-20 tons of bullion gold.

Infonet has quoted its sources as saying that the first gold auction may be
organized this week at the soonest, or in late April.

A senior executive of a big gold trade company in Hanoi said his enterprise is
looking forward for the first auction.

“Under the current regulations, the State Bank would send a notice about the
auction one day in advance. We are really expecting the auction which we hope
would help warm up the market,” he said.

It’s still unclear when the auction would be organized this week, but a source
said the auction would not be organized on Friday, because the prices fluctuate
heavily at the end of weeks, while the world’s opening and closing time does not
coincide with the Hanoi’s time.

Analysts put a high hope on the gold auctioning, believing that once a big
volume of gold is marketed, this would immediately cool the market down and
narrow the gap between the domestic and the world prices.

However, they are not sure if this should be the long term measure for the gold
market control.

The price gap existing for the last long time is believed to be caused not by
the supply-demand imbalance, but because of the speculation. Therefore, the
supply increase would not help settle the problem to the every root.

Bang thinks that this should be seen as a temporary solution only, while in the
long term, the State Bank should allow to trade gold on accounts to ease the
demand for in-kind gold.

Compiled by Thu Uyen

By vivian