SJC stops buying deformed gold bars as price rises

SJC stops buying deformed gold bars as price rises

 Saigon Jewelry Co (SJC) Monday stopped buying back deformed gold bullion from local people who want to resell them

Nguyen Cong Tuong, deputy head of SJC sales department, told Tuoi Tre that the firm had to do so because it was running out of money.

“We have bought back a lot of deformed SJC gold bullion over the past two months without being allowed to reprocess them into normal gold bars,” said Tuong.

“This has caused a real stagnancy in the flow of our working capital, so we have had to offset it with bank loans, and paid the interest rates.”

“We have sought for State of Vietnam permits to reprocess the gold bullion, but they have not yet been licensed,” Tuong added.

The gold price on Monday surged to a two-month high at VND42.51 million a tael, but slipped to VND42.46 at the opening of Tuesday’s trading session. Spot gold on the world market was at $1,612.8 an ounce, some VND1.91 million cheaper than the local gold price.

SJC moves have immediately been reapplied by other gold shops as SJC dominates the local gold market with about 95 percent market share.

The company in late May also refused to buy back deformed SJC gold bullion, and then resumed the program on June 6.

Tuong told Tuoi Tre the company stopped exchanging deformed SJC gold bullion as of May 25 because the central bank restricted its gold bullion processing following a new management regulation.

“SJC has submitted documents to the central bank to ask for permission to reshape the deformed bars, but has yet to receive any response,” said Tuong.

SJC late last year was empowered by the SBV as the sole gold bullion manufacturer of Vietnam.

This was reaffirmed by SBV deputy governor Le Minh Hung at a media conference on July 4, 2012.

Under decree no. 24, which took effect on May 25, 2012, the government is the monopoly in processing gold bullion, and it has assigned the central bank to manage the gold trading market, he said.

Consequently, all of the licenses granted for gold manufacturers, including SJC, have expired since the issuance of the decree.

With SJC holding 95 percent of the gold bar market, and enjoying a good reputation for its quality and prestige, the central bank has decided to choose SJC as the state brand of gold bullion, said Hung.

tuoi tre