VietNamNet Bridge – Gold holders have been worried stiff on the news that
only 99.99% SJC one-tael bullion gold to be made under the permission of the
State Bank can be used in transactions.
This is one of the new provisions found in the draft circular that stipulates
the regulations on the sale and buy of bullion gold on the market.
What will happen with small-sized bullion gold?
Huong in Phu Nhuan district in HCM City said she feels worried after reading the
draft circular opened for public opinions compiled by the State Bank.
“I have the habit of keeping my assets in gold. Since I don’t have much money, I
can buy 0.1-0.2 taels of gold each time. I wonder if I can sell the gold later,
if it is not one-tael bullion gold?” she questioned.
SJC now has seven kinds of bullion gold, 0.5 tael bullion gold, 0.1, 0.2, 0.5,
1, 10 tael and one kilo billion gold products. The prices of the products as
quoted by SJC are the same. However, in fact, the buyers of small gold bullion
have been in disadvantage: they bear higher prices when they buy and have to
sell at lower prices when they sell gold back.
Tran Thanh Hai, General Director of VGB, a gold trade company, said people have
to pay higher for small gold bullion because of the higher production cost for
small gold bars. Meanwhile, businesses have to pay lower to buy small bars in
order to avoid loss.
“The State Bank attempts to stipulate that only one-tael SJC gold bullion would
be eligible for transactions because these products are dominating in the
market,” Hai said. However, he admitted that the regulation, if applied, would
affect the small bullion gold holders.
In principle, the State Bank would serve as the final gold buyer and seller on
the gold market. If the State Bank refuses to buy small gold bars, businesses
would have to think carefully when buying small gold bars from people.
While the State Bank of Vietnam insists on the strict regulations, saying that
it’s necessary to lay down a perfect legal framework on the gold market
management to gradually stabilize the prices, gold businesses keep worried about
the new regulation.
General Director of a gold company said while the State wants the transactions
between businesses and the State Bank to be carried out under the mode of spot
delivery, the delivery can be made within two working days, which would badly
affect the business of gold companies.
“The gold price fluctuates every hour, while the delivery duration can last two
days,” he said.
He went on to say that in order to make trade transactions, gold companies would
have to arrange big sums of cash, which would push the trade costs high up.
“If so, the domestic gold price would never be able to come close to the world
price as targeted by the State Bank,” he said.
Gold companies have also complained that the provisions in the draft circular
would put gold enterprises in disadvantage. For example, though businesses have
the license for trading bullion gold already, they would still have to apply for
establishing the trade relations on gold bullion trade, which means that they
would have to ask for the permission from the watchdog agency twice.
Dinh Nho Bang, Secretary General of the Vietnam Gold Business Council, has
commented that the State seems to tend to make deep intervention into the gold
market, though the gold purchase and sale should be seen as the trade relations
between businesses and people.