Gold companies impatient with import blocks

Gold companies are complaining that they have not been allowed to import gold, despite applying to sometime ago. Meanwhile, the domestic gold price is higher by 600-700,000 per tael than the world’s price.

On February 5, 2010, the State Bank intervened in the gold market by requesting Saigon Jewelry Company (SJC) sell gold to the market. SJC also became the only company which was granted a quota to import gold in the first phase of the year.

There has been no exact figure on the gold volume the company imported, but analysts have guessed that at least eight tons of gold was imported by SJC in February 2010 alone.

SJC has been selling bar gold to the market to help stabilize it. According to Nguyen Cong Tuong, a senior executive of SJC, on February 5 alone, SJC marketed 30,000 taels of gold, while it sold only several thousand taels per day in the days before. SJC has sold 150,000 taels so far to help stabilize the market.

Thoi bao Kinh te Vietnam quoted its source as saying that together with SJC, two big banks, ACB and Sacombank were also instructed (unofficially) by the State bank to sell tens of thousands taels of gold to help stabilize the market on February 5.

However, the newspaper commented, the intervention measures have not brought the desired effects. The domestic price is still much higher than the world’s price.

The world’s price at 11.40 am of February 26 was 1,110 dollar per ounce, which means that the domestic price should have been 25.85 million dong per tael. Meanwhile, the domestic gold price quoted by SJC at the same time was 26.43 million dong per tael, or 580,000 dong per tael higher than the world’s price.

Meanwhile, according to Phu Nhuan Jewellery Company (PNJ), the domestic price should be higher by 80,000-100,000 dong per tael only, and that the 580,000 dong per tael gap is unreasonable.

Gold companies well understand that once the domestic price is much higher than the world’s price, this is the right time for them to import gold to make profit. However, the problem is that many companies have not been allowed to.

“We cannot import gold and we cannot make gold transactions on accounts. Therefore, we have to purchase gold on the domestic market,” said a representative from PNJ. “We now have to purchase gold at the prices set by SJC and we resell the gold at a slightly higher price to make a profit,” he added.

The representative said that if the central bank wants to stabilize the market, it should allow more than one company to import gold.

“If we are allowed to import gold, we will be able to take the initiative in our trading and feel safe to sell gold at the prices close to the world prices,” he said.

Meanwhile, Huynh Trung Khanh, deputy secretary general of the Vietnam Gold Business Council, thinks that the State Bank has its reasons to allow only SJC to import gold.

“Gold is a kind of special commodity. This could be the reason why the central bank does not want to allow many companies to import gold. One importer would be easier for management,” he said.

VietNamNet/TBKTVN

Tags: vietnam gold, Vietnam gold price