Gold price gap leads to surge in illegal imports

Gold price gap leads to surge in illegal imports

Illegal gold imports increased for the past week as the price gap between the domestic and global markets grew larger, a gold trading management official in HCM City told Nguoi Lao Dong (Labourer) newspaper.

The official, who declined to be named, said that with the current local gold premium of more than VND5 million (US$238) per tael, smugglers easily earned a few million dong per tael. (One tael is equivalent to 1.2 ounces)

As the gold price in the global market dropped by nearly $200 per ounce, the disparity grew between domestic and global prices. Nguyen Thanh Truc, chairman of the Agribank Gold Co executive board, recommended that the central bank sell gold at prices lower than the market price at its auctions to decrease this gap, while traders expressed concern that smugglers would imitate the SJC gold brand to sell in the domestic market.

Smuggled gold was easy to trade in the domestic market, they said, as the market watch authorities strictly monitored the purchase, sale and production of gold bullions – but not gold jewellery.

Nguyen Van Dung, chairman of the HCM City Jewellry Association, said that according to the International Monetary Fund (IMF), Viet Nam consumed about 77 tonnes of gold in 2012 even though the country had not licensed imports of the precious metal.

"The central bank had not granted licences for importing material gold to produce gold bars, but a large jeweller can produce millions of jewellery products a year. So where did all that gold come from?" Dung said.

vietnamnews