Home » Banking & Finance, Gold » Gold still hot though banks stopped accepting gold deposits

Commercial banks hGold still hot though banks stopped accepting gold depositsad to stop mobilizing capital in gold and lending in gold on November 25, as per a decision by the State Bank of Vietnam. However, contrary to all predictions, the gold price has soared.

Though banks do not receive gold deposits anymore, they still provide the safekeeping service. Eximbank, for example, charges the fee of 0.01 percent per annum for the service, provided that people entrust at least one tael of SJC gold.

ACB now also provides safekeeping service with the fee of 0.05 percent per annum. At SCB, if gold deposits become matured and depositors still do not turn up to get the deposits back, the bank would keep the gold free of charge. If depositors leave the gold at the bank for at least one month they must give notice in advance if they want to withdraw the gold.

Economists noted that banks have stopped mobilizing gold from the public smoothly and peacefully, because the State Bank has set up a clear roadmap for the program, thus giving banks enough time to prepare for this.

However, contrary to all predictions that the gold price would decrease sharply once people cannot deposit gold to make profits any more, the gold price unexpected soared last week.

In Hanoi, SJC gold was traded at 47.24 – 47.39 million dong per tael earlier last week. The figures were 47.24 – 47.39 million dong per tael. As such, the SJC gold price has increased by 400,000 dong per tael.

Surprisingly, Rong Thang Long brand gold of Bao Tin Minh Chau Company has seen a sharper increase of 450,000 dong per tael, now traded at 43.5 – 43.75 million dong per tael.

Though the gap between the domestic SJC gold price and the world price has been narrowed, it is still big at 3.3 million dong per tael. It was 3.6 million dong per tael late last week.

However, since Rong Thang Long gold is less favored than SJC in Vietnam, it now remains cheaper than the world’s price by 300,000 dong per tael.

Dr Nguyen Tri Hieu, a banking expert, has attributed the gold price increase to the higher demand from banks, which need to buy more gold to balance their gold positions.

Meanwhile, the last months of the years are always the high sales season, when people rush to buy gold jewelries to wear on Tet days.

While the demand tends to increase, the supply remains limited because the State Bank does not grant quotas to import gold.

Since the State Bank of Vietnam has stated that SJC is the national gold brand, people now only accept to buy SJC brand gold, thus leading to the high increase in the demand for SJC gold and the short supply.

However, Dr Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM) thinks the other way.

He believes that commercial banks now don’t have to buy gold now to balance their gold positions. Only two or three banks still cannot balance the positions, while the deadline for finalization has been extended to June 30, 2013.

Thanh said that though people nowadays cannot deposit gold to enjoy interests, the demand for gold remains very high, because Vietnamese people have the habit of keeping gold as their assets, considering gold as a shelter to hide themselves.

Agreeing with Thanh, Dr Can Van Luc, a well-known economist, affirmed that the domestic price still has been following the world price. In Asia, gold was traded at 1749.2 dollars per oz on November 26, an increase of 22 dollars over the last trading session last week.


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