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The priGold prices bounce despite State Bank controlce of gold in Vietnam, long coveted here as a hedge against economic uncertainty, remains substantially higher than the international price, even though the State Bank now exerts control on the trading of gold bars.
Under the authority of Circular No.16/2012/TT-NHNN, dated May 25, 2012, as of January 10, 2013, the State Bank granted gold bar trading licences to only 22 banks and 16 businesses found to meet specific conditions for the business.

Since then, the gap between the domestic and international gold prices has fluctuated. After January 10, 2013, the gold price gap narrowed from VND5 million ($240) to around VND3 million ($144) per tael, but it has since stretched wider.

The price of national gold bar brand SJC at the end of January 2013 was VND45.62 million ($2,190) per tael.

Some economic analysts say the State Bank’s attempt to curtail the volatility of gold is not working.
Economist Nguyen Minh Phong from the Hanoi Socio-economic Research Institute, said the goal of the state’s action is anti-goldenisation, but that a wide gap between domestic and international gold price could inadvertently make gold become the second currency.

Banking expert Nguyen Tri Hieu, a co-founder of the first Vietnamese bank in the US, said there were no reasons to be worried if the difference between domestic and international gold bar is around VND300,000-400,000 ($14.4-$19.2) per tael. But gaps of VND3-4 million ($144-$192) per tael, as has been the pattern recently, is bound to encourage gold speculation and smugglers.
“Speculators might try to import gold by using foreign currencies, then it would affect the foreign exchange reserve of the nation,” Hieu said. “If the situation has yet to happen, it may happen in the future.”

Based on the Government’s Resolution 01/NQ-CP dated January 7, 2013, the Government required the State Bank to quickly complete gold market management mechanism to stabilise the market with the objective of moving domestic prices closer to world prices, while creating little impact on the psychology of people and investors.

A draft decision to be issued by the Prime Minister to govern the sale and purchase of gold bullion on the domestic market was also released early last week. Accordingly, the State Bank would buy and sell gold bullion to stabilise domestic gold prices and would also buy additional gold bullion from other countries for the purposes of managing foreign reserves.

Nguyen Quang Huy, head of the State Bank’s Foreign Exchange Department, said the bank aims to pull the domestic price close to the global market..

“However, it would be hard to pull down the gap in one or two trading sessions. The State Bank expects to buy back gold after the end of June 2013 when all credit institutions close their gold position,” said Huy.

Do Minh Phu, chairman of gold and gem group Doji, said gold prices in 2013 would not increase by 25-30 per cent as in the past, but will still trend upward. The domestic gold price could increase by 9 per cent while the percentage for international one is 10 per cent.


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