Banking industry holds 100 tonnes of gold

It is reported that around 100 tonnes of gold are currently with commercial banks, yet the amount in circulation is not that substantial due to the current regulations against banks’ selling of mobilised gold.

The newspaper Youth cited the State Bank of Vietnam (SBV)’s statistics as reporting the existing residents’ gold savings of between 300 tonnes and 500 tonnes. Individual customers” gold deposits at commercial banks, in the meantime, are staying at 2.4 million taels, equivalent to 100 tonnes. Banks are not eligible for selling or lending gold that is merely to increase their assets in the event of the market’s supply shortages.

Earlier, banks’ total gold loans reached above 1.1 million taels, equivalent to nearly 50 tonnes. The galloping gold prices have recently called for much more required collateral for such secured loans.

Proposal for banks’ selling gold

It is estimated that as of 11 August around 1 tonnes of gold was imported and the expected total amount of 5 tonnes of imported gold would therefore cost approximately US $250 million.

Tran Thanh Hai, general director of Vietnam Gold Business (VGB) said that banks should be allowed to sell their gold deposits so as for domestic gold prices to be in line with the international prices without detriment to the national foreign currency reserves. Also, relevant agencies should be granted privileges to carry out international gold swap operations.

Accordingly, domestic gold scarcity that has pushed up the local prices much above the international prices could greatly be helped by the amount of gold attracted through the banking sector and such transactions. The local prices would then dip to a relatively acceptable level which could prompt gold repurchasing and termination of swap transactions in the international market.

As such, international gold swaps merely require a deposit of hundreds of thousands of US dollars for in comparison to US $50 million for 1 tonne import and such advanced payment will stay at the time of settlement. – Thanhnien

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices