Vietnam - More than 10 tons of gold sold to stabilize market

by lexie Fri Oct 14, 2011 12:04 pm

October 14, 2011

Vietnam - More than 10 tons of gold sold to stabilize market

It is estimated that more than 10 tons of gold have been sold in an effort to stabilize the market and ease the “gold fever”. As the supply is profuse, the market has become less boisterous. However, the domestic price is still higher by 1.5 million dong per tael than the world’s price.

The State Bank of Vietnam has not released the report about the amount of gold sold by the five commercial banks and SJC, which were allowed to sell gold to stabilize the market, since October 6. However, estimates of banks and enterprises say the volume has reached 10 tons. Of this, the Saigon Jewelry Company (SJC) sold 60,000 taels, or more than two tons.

The gold supply has been profuse, and gold companies have mostly been selling merchandize gold in stock, while they do not have to import more. However, the gap between the domestic and the world’s prices has not been narrowed to 400,000 dong per tael as expected by the State Bank of Vietnam, if calculating the gold price in accordance with the dollar prices quoted by commercial banks.

As of 1 pm on October 12, big banks and enterprises’ gold prices were quoted at 43.55-43.85 million dong per tael. At the same time, the world’s price stayed at 1666.5 dollars per ounce. As such, the domestic price was still higher by 1.5 million dong per tael than the world’s price.

Some experts say that SJC and commercial banks should not set up such a price which is much higher than the world’s price, because the banks sell gold in stock in accordance with the State Bank’s policy on stabilizing the market. The sellers do not have to spend dollars to import and do not have to pay transport fee. Therefore, the prices at which gold is sold to people should be calculated based on the dollar price quoted by banks and should not count on fees.

A manager of Asia Commercial Bank (ACB) has revealed that after one week of selling gold under the program to stabilize the market, the bank still can balance its gold position, while no need to buy gold on international accounts.

However, Nguyen Cong Tuong, Deputy Head of the Business Division of SJC, argued that SJC and other five commercial banks cannot define the gold sale prices based on the dollar prices quoted by banks. (the dollar prices quoted by commercial banks are always lower than the dollar prices on the free market, because banks must not quote the prices higher than the ceiling levels).

Tuong said that at present, gold importers have to buy dollars at 21,500 dong per dollar, not at the quoted prices, to import gold.

Therefore, he has denied the information that the domestic price is now higher by 1.5 million dong per tael than the world’s price. He said that if counting on different kinds of fees, the gap between the domestic and the world’s price has been narrowed to 500,000 dong per tael.

“This should be considered a reasonable gap at this moment,” Tuong said.

Bankers in the “5+1” group (five banks plus SJC Company) also said that though they sell the gold in stock, they cannot set up low sale prices, because they have to buy gold later to balance the gold position at high prices. Besides, they have to plan next gold import consignments to ensure stable supply.

“It is impossible for banks to sell gold at the prices lower than the market prices. If we do this, people will rush to purchase gold. If so, we will not be able to satisfy the demand within a short time,” said general director of a bank.

Sources say that a lot of banks are seeking the permission from the State Bank of Vietnam to join the campaign of selling gold to stabilize the market, after they realized that the gold sale has brought fat profit. Phuong Nam and Viet A are two of the banks

Very few successful transactions have been reported these days. On October 11, DOJI Group sold 5000 taels of gold, much lower than that of previous days.

http://www.vietfinancenews.com/2011/10/more-than-10-tons-of-gold-sold-to.html#more