National gold trading floor establishment proposed

Aug 13th at 12:47

13-08-2012 12:47:02+07:00

With the current gold management policy, the domestic gold prices prove to be unpredictable. Removing the quota scheme, allowing gold trade on account is the solution proposed by experts.

Gold price on the rise, money flows to gold market, again

Though the gold prices still have been fluctuating, experts have been sure about the upward tendency. Nguyen Thanh Truc, Deputy Chair of the Gold Business Council, thinks the world price may reach 1800 dollars per ounce in September and continue rising in the last months of the year.

Tran Thanh Hai, General Director of the Gold Transaction Center, sharing the same view, said the domestic gold price, like the world price, would keep rising towards the end of the year.

“The gold price is likely to climb to 2000 dollars per ounce by the end of the year,” Hai said.

In July 2012, Deutsche Bank AG predicted the gold price would surge to 2000 dollars per ounce by the end of 2012. Most recently, HSBC has predicted the gold price would hit the 1900 dollars per ounce threshold, due to economic and political uncertainties, as well as the doubts about the US election in November and the move by central banks to buy more gold for reserve.

Dr Le Xuan Nghia, Member of the National Advisory Council for Monetary Policies, also thinks that the gold price would reach 1700 dollars per ounce by the end of the year.

The prediction about the upward trend of the gold prices has stirred up the investors. Bullion gold traders have confirmed that the gold market has been more bustling since late July. Nguyen Cong Tuong, a senior executive of SJC Company has confirmed that the sales have increased significantly. Meanwhile, “virtual gold trading floors” have been trying to lure more investors by offering a lot of preferences.

Experts suggest removing quota scheme, allowing gold trade on account

Gold experts have pointed out that though the gold price increase tendency is obvious; it is still risky to invest in gold, because the domestic price does not “communicate” with the world price.

Dinh Nho Bang, Deputy Chair of the Gold Business Council, said that with the current foreign currency management policy, it’s very difficult to predict the gold prices in medium and long term.

Meanwhile, Dr Nghia said the Decree No. 24 on the bullion gold trade management cannot bring the desired effects. Vietnam wants to see the gold prices decrease, reduce the gold imports and increase the capital mobilization in gold for economic development.

Especially, Nghia said the decree may create high risks for the State Bank of Vietnam, once the world and the domestic prices fluctuate heavily.

Nghia believes that it would be better to remove the current quota scheme and apply the automatic quota mechanism. He also said that commercial banks should be allowed mobilizing capital in gold and trading gold on account in order to balance the market and prevent risks.

If so, the State Bank of Vietnam would be able to convert gold into money and vice versa, with certain conditions, depending on what the monetary policy targets in different periods.

Gold trading companies have also said that gold trading floors still have been operating for the last two years, despite the ban by the State Bank. This shows that investors really need a channel for their gold investment deals. Therefore, it would be better if the State Bank allows trading gold on account and setting up the national gold trading floor.