When the gold exchanges close – where does the money go?

On the last day of 2009, an investor named Ly did not visit the gold trading floor. Instead he stayed at home and tried to figure out what he will do with his money when the gold trading floors shut down on March 30, 2010.

The gold trading volume dropped dramatically on December 31, following the announcement of the shutting down of gold exchanges. At SJC-Eximbank, only 1,700 taels of gold were traded worth 43.5 billion dong. Meanwhile, 10 days ago, the trading floor saw 7,570 taels of gold traded, worth 191 billion dong.

On ACB gold trading floor, the trading volume was 8,000 taels only, while the normal level was 300,000 taels per day previously.

VGB gold trading floor has advised investors to choose the most suitable moments in the next three months to settle up and move on. For the time being investors can still make transactions on VGB trading floor while money and assets are secured at the banks associated with VGB.

Ly said that the liquidity on gold trading floors is now very weak, which dissuades him from continuing to make investments, though gold trading floors still can operate for three more months. Ly said that he is now making no moves and instead is just waiting to see what happens.

Unlike Ly, Phong, another gold investor said that he and his team of investors will continue making investments in bar gold.

Meanwhile, investors are considering other channels. The real estate sector however is not attracting gold investors, because its immediate future is still unclear. Besides, as many investors shift to investing in bar gold, the domestic gold price will increase, which will affect real estate purchases.

The stock market is the place where most gold investors see their future However, the need for investors to have access to large capital may put some off. Other investors fear that if gold investors rush to make securities investments, the stock prices will skyrocket, which will bring high risks to investors

Analysts believe bank savings will be the temporary residence for the money of gold investors, until the investors can find new investment channels.

While gold investors may feel upset spare a thought for owners of gold trading floors who also look for another kind of business.

“VTG will use its system for securities transactions,” said Lam Minh Chanh, General Director of VTG gold trading floor.

.ACB’s gold trading floor brought 120 billion dong in transaction fees alone in the first nine months of 2009. At Eximbank, net profits from gold and foreign currency trading in 2008 accounted for 32 percent of net revenue for the whole year.

VietNamNet/SGTT

Tags: Vietnam gold market