VietNamNet Bridge – Contrary to all predictions, the State could not sell
gold at the auction held on March 28, 2013. It was because the gold became too
expensive after going through the State Bank’s hands.
Only two investors bought 2,000 taels at the auction on March 28. The sale price
was VND400,000 per tael higher than the market price at that moment. Meanwhile,
investors thought that the State Bank would set the prices lower than the market
prices in order to help stabilize the market.
High prices made products unsalable
Sources said that 40 investors were invited, but only 21 banks and businesses
registered to participate in the auction, and only 17 were officially present.
Of these, 15 made blank votes.
Only ACB bank and Phu Quy Company registered to buy 1,000 taels for each. Since
there was no other competitive price offered, both of them successfully bought
2,000 taels of gold.
To all surprise, the State Bank only set up the floor price and did not the
ceiling price as initially planed. Especially, the floor price was much higher
than expected by investors.
If comparing with the opening price quoted by most of gold trade companies on
the day, the floor price of VND43.81 million per tael was higher by VND400,000
“The floor price for reference set by the State Bank was a big surprise to us,”
a senior executive of a gold company told Tien Phong after the auction.
“We thought before that the floor price would be VND43.6 million per tael, which
was equal to the Wednesday’s closing price,” he said.
The State Bank of Vietnam, explaining the floor price it set, said that the
market may not “absorb” all the gold launched into the market, if the State Bank
provides gold at low prices.
A senior official of the bank also said that the high prices would help prevent
speculators from collecting gold at low prices for reselling later for profits.
It’s understandable why the State Bank set up a high offered price. The 26,000
taels of gold put into the auction are worth VND1.1 trillion. The pricing at
high level has created a barrier which helps make gold less attractive for
Gold becomes more expensive when going through the State Bank’s hands
The said senior executive of a gold trade company said the happenings on March
28 were unpredictable.
“The gold price, after going through the hands of the State Bank has become even
more expensive than our price,” he said.
Meanwhile, the representative of another gold company said investors participate
in the auction just to listen for the news. They did not dare to buy gold at
such a high price.
“No one would be foolish enough to speculate gold when they see such a big price
gap,” said Dr Vu Dinh Anh, a well known economist
“I could not understand what the State Bank strives to when setting the gold
price at such a high level,” he added.
The State Bank, when announcing the auctioning mechanism, said that one of the
aims of the auctions is to help narrow the domestic and international prices.
This means that the domestic price needs to decrease by VND3 million per tael to
come closer to the international price. However, Anh said, it’s obvious that the
announced goal has been unreachable.