VIETNAM - Draft decree makes gold keepers sigh with relief

by lexie Wed Nov 23, 2011 3:21 pm

Last update 23/11/2011 03:00:00 PM (GMT 7)

Draft decree makes gold keepers sigh with relief

VietNamNet Bridge – People had been rushing to sell non-SJC brand gold in the last few weeks, until the State Bank published the draft decree on the gold management on its website, which said that the bullion gold, produced in the past under the permission of the central bank will still be allowed to be put into circulation.

VIETNAM - Draft decree makes gold keepers sigh with relief 20111123104225_gold231

The gold market witnessed the wave of people rushing to goldsmith shops to sell the gold products which do not bear SJC brand. Hundreds of thousands of people, who kept non-SJC brand gold, feared that they would suffer big losses, once the new decree on the gold market management is issued.

The draft decree, which has been opened for collecting people’s opinions, imposes strict requirements on bullion gold producers. If referring to the requirements, one would realize that only SJC brand gold owned by Doji Group, can satisfy the requirements, which means that only SJC brand bullion gold will be able to exist on the market.

SJC brand gold is now holding 90 percent of the market share. Meanwhile, when the new decree takes effect, the other seven producers will have to withdraw from the bullion gold market.

Therefore, people rushed to sell non-SJC brand gold, fearing that their gold would become unsalable after the new decree takes effect.

Though no official decision has been made, while the new regulation remains on paper, the gold market still witnessed a strong wave of people rushing to buy SJC gold and sell non-SJC gold, especially in the two big cities of Hanoi and HCM City. This has led to the fact that non-SJC gold was always lower by 400,000-600,000 dong per tael than SJC gold.

Experts believe that the total volume of gold products bearing non-SJC brands, such as Bao Tin Minh Chau and AAA, is very big, about hundreds of tons. The figure has been released after experts considered the produced and sold volumes in the last many years.

As such, doubts have been raised that whether enterprises can buy back all the non-SJC brand gold products. Some gold trading companies reportedly had to halt buying the gold products made by themselves, because of the overly high number of people who tried to sell non-SJC gold. Meanwhile, there is no one who wants to buy non-SJC gold nowadays.

A question has been raised that if non-SJC gold products continue decreasing in prices in comparison with SJC gold in the context of the sharp supply-demand imbalance. The second question is that to whom people will sell gold, if there is no buyer.

The question could not find the answer, which has made people worried more. Meanwhile, the state management agencies kept quiet.

Experts have reminded the central bank, the compiler of the decree on the gold market management, to pay attention not only to putting the market under strict control and to mobilizing the capital resources from the public, but also to ensuring the benefits of people.

The experts said that the decree should allow people to change non-SJC brand gold into SJC-brand gold, in case SJC is selected as the national gold brand.

In the latest news, the State Bank has shown that the bullion gold products, which were produced in the past under the permission of the central bank, will still be able to be put into circulation after the new decree takes effect. However, the information was only released on the afternoon of November 21, or after many days the market witnessed the chaos due to the misunderstanding caused by the unclear provisions of the draft decree.

The information was released to reassure the public and prevent them from bargaining away non-SJC gold.

http://english.vietnamnet.vn/en/business/15676/draft-decree-makes-gold-keepers-sigh-with-relief.html