VietNamNet Bridge – After the world’s gold price tumble and the heavy
fluctuations of the domestic prices, the belief that gold is a safe shelter in
the storm has become shaky.
The gold price remains unpredictable even after the last consecutive auctions
organized by the State Bank of Vietnam through which 11 tons of gold have been
put into circulation. Bullion gold keepers now feel worried when seeing the gap
between the domestic and international prices getting widened despite the
central bank’s efforts to increase the market supply.
Gold glitters no more
The State Bank on April 23 put another 26,000 taels, or 1 ton of gold, into
auction, at the starting price of VND41.97 million per tael, or VND200,000 per
tael higher than the buying price and VND200,000 per tael lower than the selling
price quoted by gold companies at the same time.
All the 1 ton of gold was sold out at the prices of VND42.02 million per tael at
the lowest and VND42.12 million per tael at the highest.
To date, the State Bank has put 328,000 taels of gold into auction, while having
sold 289,400 taels, or 11.1 tons of gold. The buyers are mainly the commercial
banks which need to gold to finalize their accounts prior to June 30, 2013 as
requested by the State Bank.
After the bid, the SJC brand gold once climbed to VND42.2 million per tael, but
then slightly decrease later in the afternoon. The margin between the selling
and buying price was up to VND300,000 per tael. The gap between the domestic and
international prices on the same day was VND6.2 million per tael.
The unpredictable international price performance plus the overly big domestic
price gap both have made the investors hesitate to make transactions.
A senior executive of Bao Tin Minh Chau, a well known brand in Hanoi, said that
the market was very quiet earlier this week since people expected to see the
clear tendency of the gold price. The market has got more bustling later, but
there have still been less transactions than in normal days.
Meanwhile, the head of the business division of a gold company has noted that
most of the sellers sell gold because they fear they prices would drop further,
while most of the buyers buy gold to make payment for goods and services, or pay
debts. This shows that people now do not try to keep gold as a kind of assets
any more.
Nguyen Mai Hoa, who sold gold to Phu Quy gold shop, said she feels that she is
facing high risks because the gap between the domestic and the international
prices has been unceasingly increasing.
“Gold companies always pay low when buying gold from the public, while they
always charge very high when selling gold to people,” she noted.
Making deposits instead of keeping gold
Investors now feel puzzled about where they should inject money in. Many of the
investors still believed that keeping gold was the best solution until they saw
the price chaos recently.
The real estate market remains frozen, despite the noisy arguments among state
management agencies and economists about the policies to revive the market.
Since the liquidity is too weak, it is clearly not a good choice to pour money
into the real estate sector.
A report showed that the cash flow to the stock market has slowed down with the
average trading volume in March on the HCM City bourse reaching 49.39 million
units only per trading session, down by 35 percent over February with 76 million
units, and 40 percent over January.
In Hanoi, the trading volume decreased by 42 percent and 50 percent in March
over February and January, while the trading value decreased by 45 and 46
percent, respectively. Dollar trading will not bring profits since the exchange
rate keeps stable.
Therefore, depositing money at banks remains a big choice for investors, which
explains why the mobilized capital has increased by 3.86 percent.
Vu Phong