Vietnam: Gold is a problem for dong exchange rate - THIS will be fixed ;)

by **ADMIN** Mon Aug 22, 2011 7:58 am

Put a few articles together to show you the plan, again, to get these people to stop hording other ways of trade, and put everything in dong, so they can bring up the value. . . One thing is funny to me, There has NEVER been a lack of article in the banking finance business sections out of Vietnam, unless their is a major holiday. . . IMMEDIATELY the day after they put out the article about increase the dong over the next 4 months. . . FINANCE news has drizzled in. . . Interesting....

The following articles are interesting in that when they FINALLY decided they had enough of the dollar hoarding. . . they made it illegal for trade. Just read the titles on the GOLD arts posted here. . . THEY WANT THE DONG INCREASED in VALUE, and THEY MEAN BUSINESS. . . the one thing you can say about Vietnam as compared to Iraq, you dont get BS articles, you get what they mean for you to have, and you can bet that there is no fluff, and ONLY truth... They mean what they say, and say what they mean...

SO the article about increasing the dong. . . IS ROCK SOLID, and a SURE THING. . .

Blessings!
Miskebam

STABILIZING THE VIETNAM DONG VALUE AND MANAGING THE GOLD MARKET KEY GOALS FOR IMMEDIATE TIME (and LONG TERM AS WELL)

August 16th, 2011

VietFinanceNews.com - In the interview given to Thoi bao Kinh te Saigon, the newly appointed Governor of the State Bank of Vietnam, Nguyen Van Binh said setting up a perfect legal framework to effectively manage the gold market, and stabilizing the Vietnam dong value are the key goals of the monetary policies for the immediate time and long term as well.

Starting the conversation with a burning issue – the gold price escalation – Binh said:

The domestic gold price has unexpected become higher by 0.8-1.2 million dong per tael than the world’s price. This could be partially because of the speculation. We have planned to change the policies on gold management, but no changes have been made. Since April 2011, the domestic prices were always lower than the world’s prices. However, we can see changes in the people’s habit of hoarding gold: they know can choose the right time to sell gold out when the prices go high.

However, people have stopped selling gold. They now rush to purchase gold amid the price escalations…

There are two reasons behind the people’s decision to buy gold now. First, the international prices have been increasing dramatically, while experts all believe the prices would go up further. The forecast price increases have made people delay their sale plans, and prompted people to buy gold to hoard up in anticipation of the price increases.

Second, the speculators have been trying to set up the prices for the market, and they have decided to carry out their plan at the time when the international prices skyrocket.

What will the State Bank do to deal with the speculation?

Vietnam is not a gold producer, while it is really a normal thing if the domestic prices go up and down in accordance with the international prices. The task of the State Bank is to stop the speculation which causes losses to gold holders. While waiting for the new decree on gold trade management, the State Bank will have to ensure the supply and demand in balance, so that in all cases, the domestic prices should not be higher than the world’s prices.

How?

We have exported 40 tons of gold recently, which has brought a big sum of foreign currencies and helped stabilize the foreign currency market. Now the State Bank allows to import gold to ease the domestic prices (the central bank has allowed to import five tons and is likely to allow to import five more tons – reporter).

Some experts have attributed the recent gold price fluctuations to the new policy on imposing the export tariff of 10 percent on the jewelry with the gold content of 80 percent and higher. What do you think about that?

We are striving to build up a perfect legal framework on managing the gold trade which allows the market to perform in economic laws and allows us to control the market as well. There are many “sensitive issues” which we need to consider thoroughly.

There are no official statistics about the volume of gold kept among people. We think the figure is about 300-500 tons. We want to turn the gold into the capital that serves the national economy.

Could you please tell us about the new points in the gold trade management policy?

Under the draft decree on gold trade management, the State Bank of Vietnam is the only agency allowed to export gold. However, the bank can use its right in a flexible way. It can either to make export itself, or authorize some enterprises or credit institutions.

Do you mean that the central bank will define the gold prices, including the prices at which it buys gold from people, based on the international prices?

This is a controversial issue. The central bank may set up the regulations on the pricing, like the regulations on the exchange rate on the foreign currency market.

Regarding the exchange rate, the gold price fluctuations have had big influences on the exchange rate…

Stabilizing the value of the Vietnam dong is our key goal. Stabilizing, not fixing.

http://www.vietfinancenews.com/2011/08/governor-well-managing-gold-trade.html

LEGAL GOLD TRADING FLOORS SHUT DOWN, ILLEGAL FLOORS OPEN

August 18th, 2011

VietFinanceNews.com - All the gold trading floors have been forced to shut down since March 2010 as per the instruction by the State Bank of Vietnam. However, the demand for making transactions remains high which explains why many illegal trading floors have been set up.

Maybe the investors do not want to forget their “golden age” when they made gold transactions on accounts and earned fat profits. Therefore, they decide to go to illegal gold trading floors to continue making transactions. However, the international gold price fluctuations have dealt a strong blow on many investors.

Where there is demand, there is also supply

It is now easy to find on Internet the websites that allow to make gold transactions on accounts. Via the websites, investors can watch the price performance in the world market to decide what to do: either they buy gold and sell later when the prices go up, or sell gold first and then try to buy back when the prices go down.

Making transactions this way is now not accepted by the Vietnamese laws. Therefore, these are called “illegal gold trading floors.”

Unlike 2009, no investor goes to real gold trading floor nowadays, because trading floors are not allowed to operate. Therefore, companies do not set up open trading floors, but only set up small offices. The things that investors have to do is to download necessary software pieces to their computers and then carry out transactions on Internet. In order to maintain the active status of the gold accounts, investors just need to pay in money into the bank accounts of the companies.

As such, though the State has forced the operation of gold trading floors since 2010, gold trading floors still have been existing. The problem is that since the trading floors are illegal, investors’ benefits cannot be protected by the laws, and in case of dispute, they would be put at a disadvantage.

Only 10 percent of investors make profits

The investors who make transactions on illegal gold trading floors are called the ones, who “want to burn their money,” because everyone understands well that they do not have big opportunities to make profits.

On the last few days, August 8-9, when the gold prices went up and down regularly, the café near Tran Nhan Tong Street, the gold shop street in Hanoi, received a lot of visitors. They came here just to listen for the news and make timely decisions: buying gold when the prices went down, and selling when the prices went up for profits. Many of the investors could earn big money thanks to the big fluctuations of the gold prices.

However, many other investors suffered heavily in the last price fluctuation. “ND”, an investor, said that when the world price climbed to 1600 dollars per oz, she decided to sell gold. However, the price later did not go down as expected, but kept rising. The price soared by 100 dong per oz on some days, which forced her to pay in more money into the account to maintain the active status of the accounts.

However, ND finally decided to buy gold to stop loss when the price was at 1750 dollars per oz, accepting a big loss. D said that she has stopped making transactions to wait for the prices to get stabilized, because she has been shocked with the latest unsuccessful deal.

An analysis director of a securities company related that he has received a lot of calls these days from many people who ask for his advices after they had incurred big losses.

He said that it would not be a surprise at all if the number of people who take losses is higher than the number of people who make profits. In general, only 10 percent of investors make profits, while the other 90 percent take losses, bigger or smaller.

Why do people still want to make gold transactions though they only can see little opportunities, then? The analyst said that a lot of investors want to try their luck, especially when they are offered very favorable conditions. Investors just need small sums of money, while they can borrow the money much bigger than the money they have, to make investments.

http://www.vietfinancenews.com/2011/08/legal-gold-trading-floors-shut-down.html

VAFI calls for SBV to scrap plans on a national gold trading floor
August 19th

VietFinanceNews.com - The Vietnam Association of Financial Investors (VAFI) has called on the State Bank of Vietnam to scrap plans on establishing a national gold trading floor as it would not bring any benefit to the economy.

The national gold trading floor, proposed by the Vietnam Gold Business Association and several experts with the aim of removing the gap between the world and domestic prices and preventing gold "fever", has stirred controversy.

In a letter sent to the SBV on Tuesday, VAFI said the gold trading floor would encourage the flow of cash into gold, which undermined the strength of the national currency.

According to the association, about 99 percent of individual investors suffered losses when trading gold via accounts.

Nguyen Hoang Hai, general secretary of VAFI, said that in other countries, gold trading floors were set up as part of commodities exchanges, in which groups, organisations and companies operate healthily, unlike individual investors in Vietnam .

The association also disagreed with the SBV's proposal of allowing commercial banks to borrow gold from citizens which they would then in turn loan to individuals or businesses.

Hai said that scrupulous businesses would not choose to add capital by borrowing gold and then selling it for Vietnamese dong as the method was too dangerous in the context of fluctuating global and domestic gold prices.

The proposal would also cause extreme speculation or even market chaos.

VAFI also requested that the central bank should continues to ban gold bar trading by individuals, with only authorised agencies allowed to buy gold bullion from citizens.

Hai added that the previous draft decree had helped stabilise the gold market by reducing gold trading transactions by 70 percent while removing major gold speculation.

Gold export and import quotas needed to be removed in order for the domestic gold market to operate more effectively, VAFI said.

In the past few weeks, continued increases in gold prices both inside and outside the country triggered a frenzy of buying and selling by individual investors, causing a chaotic situation on the domestic gold market.

The world spot gold price hit a record 1,817 USD per ounce last week on the London Bullion Market.

At the same time, the domestic gold price climbed to a record 46.3 million VND (2,226 USD) per tael (one tael is equivalent to 1.2 ounces).

Speculators had taken advantages of the fluctuating gold prices, raising the domestic price to more than 1 million VND (50 USD) per tael than the world price.

The chaotic situation had also impacted adversely on the forex market, creating tensions in foreign currency supply and demand.

According to VAFI, gold trading was considered a very sensitive field which could affect national monetary security and cause forex fluctuations, inflation and lower public confidence in State management of the sector.

http://www.vietfinancenews.com/2011/08/gold-trading-floor-plan-cops-flak.html

THIS article, IMO, was printed in VIETNAM papers, as a EDUCATION BLURB about WHY you DO NOT HOARD GOLD. . .

Gold 'a bubble that could deflate' analyst says

VietFinanceNews.com - Record gold prices may be heading for a correction of about 8 percent next month, but the safe-haven metal may also rally to $2,400 an ounce next year as investors seek refuge amid global economic turmoil, a global head at INTL FCStone on Saturday.

"Trees don't grow till heaven. I think buyers need to be beware. we are in a 'caveat emptor' market," said Jeffrey Rhodes, global head of precious metals at the brokerage and an industry expert, told reporters at a conference on gold in the southern Indian state of Kerala.

International gold struck a record of $1,877 an ounce on Friday, still on track for its biggest one-month rise in nearly 12 years in August and its biggest one-week gain since early 2009.

Rhodes said gold may retrace to $1,725 by next month, and then race ahead.

"My problem is that people are buying gold and they don't understand why they are buying gold and that's a big problem and that is a classic symptom of a bubble," said Rhodes.

Rhodes said there is an absence of "real motivation" for investors to cash in their gold holdings to cover losses from the equity markets.

On Friday, global equity markets slid anew and gold set a second-straight record high as fears of a possible U.S. slide into recession and concerns related to Europe's debt crisis kept investors on edge.

http://www.vietfinancenews.com/2011/08/gold-bubble-that-could-deflate-says.html

by waitingtosail Mon Aug 22, 2011 9:02 am

Thank you for keeping us up to date on what is going on the the VND!

Vietnam: Gold is a problem for dong exchange rate - THIS will be fixed ;)

Vietnam: Gold is a problem for dong exchange rate - THIS will be fixed ;)

Re: Vietnam: Gold is a problem for dong exchange rate - THIS will be fixed ;)