SBV holds state monopoly, but gold price still sky high

SBV holds state monopoly, but gold price still sky high

A big gap still exists between the world’s and the domestic gold prices. Gold is still too expensive in Vietnam, though the central bank has assumed the monopoly in making bullion gold.

According to NDHMoney.vn, Bao Tin Minh Chau at 9 am of September 5 quoted Rong Thang Long brand gold price at 42.5-42.8 million dong per tael. At the same time, Phuong Hoang brand gold PNJ-DAB was traded at 44.95-45.1 million dong per tael. As such, PNJ gold was 2.3 million dong per tael more expensive than Rong Thang Long.

Meanwhile, SJC gold was even more expensive with the prices quoted at 44.96-45.16 million dong per tael in HCM City, and 44.96 – 45.18 million dong per tael in Hanoi.

The world’s gold price reported by Kitco now stays at 1692.2 dollars per oz, or 42.6 million dong per tael, if considering Vietcombank’s exchange rate.

With the prices hovering around the 45 million dong per tael threshold, Vietnam’s price is 2.4-2.8 million dong per tael higher than the world’s price. However, the State Bank has not taken any move to intervene in the market, though it has held the power to make bullion gold exclusively.

Experts believe that the gold price in the international market may reach 1720-1750 dollars per oz, while the domestic price would still be much higher than the world price. This has been explained by gold trading firms that there are more buyers than sellers.

An expert said people nowadays do not have to queue up for buying gold, but the high daily demand from banks alone is enough to “swallow” the volume of gold launched onto the market.

Tran Thanh Hai, General Director of the Vietnam Gold Business Company, said many banks sold gold at 43 million dong per tael for Vietnam dong which they later lent to businesses at the interest rate of nearly 20 percent per annum. Now the banks have to buy gold back, thus leading to the sharp demand increases.

According to Thanh Nien, the domestic gold price has increased by 3.2 million dong per tael just within one month, or 7.5 percent, while the world’s price has increased by 5.65 percent only.

The newspaper has quoted Nguyen Hoang Minh, Deputy Head of the HCM City Branch of the State Bank of Vietnam as saying that the State Bank has ordered SJC Company to make 48,000 taels of gold. However, the information has not helped ease the domestic prices, while Vietnamese people still have to buy gold at the prices higher by 90 dollars per oz higher than in the world.

According to the experts, the State Bank should not let the domestic gold prices stay higher than the world’s price, once the domestic gold market and the SJC gold brand have been put under the control of the State Bank. Especially, the central bank has the exclusive rights to make bullion gold and import-export gold, and has all necessary tools to regulate the gold market.

The ineffective intervention by the State Bank into the gold market, which has not helped stabilize the gold market, according to the experts, shows the problems in the gold market management.

Hai believes that the artificial shortage of gold has pushed the price gap between the world’s and the domestic prices to 2-3 million dong per tael. Since the world’s price has been on the increase, people do not intend to sell gold, but they tend to buy more gold to hoard up.

Meanwhile, the state management agencies still keep puzzled with the supply sources, even though Vietnam is believed to have 300-500 tons of gold.

vietnamnet