VietNamNet Bridge – Experts deemed it necessary to set up a national gold exchange to deal with the widening gap between local and global gold prices – and the preference for keeping gold and using the precious metal as payment.
Tran Thanh Hai, general director of Vietnam Gold Business Corporation, said over 11 tons of gold had been launched into the market via ten gold auctions conducted by the State Bank of Vietnam (SBV) over the past few weeks, which will make the preference for gold become stronger.
Furthermore, the fact that multiple resources have been mobilized for SBV’s gold auctions is rarely seen among central banks around the world. Still, it cannot reduce the preference for gold.
To address this issue, it is necessary to establish a national gold exchange, said Hai at a meeting with the media in HCMC on Tuesday.
When gold exchanges are reopened, the compulsory deposit should be raised to 30% to prevent speculation and lure competent investors.
Reopening gold exchanges will create a playground based on gold accounts, rather than physical gold, and thus the gold price gap can be bridged, said Hai.
“Developing gold accounts will bring down the gold fever as price on gold exchanges is matching the world price, and reduce the preference for gold since individuals and organizations can open gold accounts instead of buying gold bars. This will also reduce the amount of foreign currency spent on gold, offer investors an additional investment channel and mark a step in forming a centralized commodity exchange in Vietnam,” he said.
Gold price remains unpredictable for experts. SBV’s policy for the gold market is also a big question.
Tran Thanh Long, chairman of the Vietnam Gold Business Association, said he was waiting for the next move of SBV after banks will completely halt gold lending and mobilization on June 30.
Many policies regarding the gold market have been adopted, slashing the number of gold traders by two-thirds. Long remarked that it seemed SBV wanted banks to become gold trading institutions.
Hai said the State should encourage gold jewelry trading to restrict gold bar trading, which fuels the preference for the precious metal.
Meanwhile, Long suggested SBV should play the role of supervisor, not the one deciding market prices.
He explained the gold market by nature is volatile, so it is impossible to use administrative orders to stabilize the market. Instead, “flexible measures should be adopted in a flexible market,” he said.
Source: SGT