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In its March 20 statement, the State Bank (SBV) affirmed the Saigon Jewelry Company (SJC) was tasked with SJC gold bar processing for the SBV, but SJC chairman Le Hung Dung denied declaring the gold bullion amounts SJC would process for the SBV.
With the company’s processing capacity of around 80,000 taels per day (equal to three tonnes of gold), SJC could have processed 10 tonnes of gold in the past week and when the SBV holds the first gold bullion bidding section slated for late March or early April 2013, in total the gold volume SJC processes for SBV might reach 20-30 tonnes.
“In the past, Vietnam imported 30 tonnes of gold per year, but not all was processed into gold bars for sale in the domestic market. Around one-third of this was to make jewels and part was for export. Hence, the market will incur an oversupply if the SBV sells just 10-20 tonnes,” said Vietnam Gold Business Association deputy chairman Dinh Nho Bang.
To prepare for the first gold bar bidding section, on March 18 the SBV enacted Decision 563/QD-NHNN on gold bullion trading. Earlier, it issued circulars on gold bar standard packaging and purchasing and the sale of gold bars in the domestic market for the SBV.
The SBV proposed a solution to selling gold for market stability and most economic experts assumed it could bring immediate effects. But, a longer-term solution is needed.
Some experts argued the domestic and world gold bullion market price gap would be shortened after the SBV sold huge gold volumes. But price differences in the past also came from ‘speculative’ factor, therefore the big divergence might still occur at some points of time in the future.
“In the long-term, the SBV shall greenlight account-based gold trading to pull down the demand for purchase and sale of physical gold which is also compatible to the world practice,” Bang said.
The SBV, based on factors like stable exchange rate, the proposed gold bullion bidding section in the upcoming weeks or gold price in the world market held on downward trend, believes the gold price would be stable and not showing a big gap with the world price.
