Gold converted into cash for business

Since the year early, Vietnam has earned over $900 million from gold exports. Now people are rushing to convert gold into cash for investment and business.

In May alone, over 20 tonnes of gold was exported for more than $800 million.

General Director of a joint stock bank said that in the past two months, its gold deposits reduced 15 percent equivalent with 16,000-20,000 ounces. A lower gold deposit rate resulted in the gold withdrawal because depositors wanted to sell gold for the dong or US dollar to send back at banks to enjoy higher deposit rates. He reported that previously when the deposit rate was high, his bank used to raise 17,000-18,000 ounces of gold or 7-8 tonnes.

According to a old business manager of a HCM City based joint stock bank, his firm’s gold mobilisation also slumped by 30,000 ounces in short time. Majority of gold depositors raced to withdraw gold and shift to another investment channel.

A bank’s deputy general director admitted that banks also want people to withdraw a part from gold deposits because they [banks] were finding it hard to do business with gold. Demand for borrowing gold previously came from speculators but the investors do not want to take gold loans any more because the gold trading floors were forced to close according to the government’s decision.

SBV did not encourage the lending for gold speculation while banks were not allowed to trade gold on accounts, so the gold volume raised via deposits is getting in surplus, banks then had to cut down gold deposit rates.

In another aspect, a jewellery company reported that it exported total 3.5 tonnes of gold in May, mainly jewellery. With an average export price of 27 million dong/tael, the firm gained $134 million or 2.560 trillion dong from jewellery export.

Similarly, Phu Nhuan Jewellery Co (PNJ)’s turnover from jewellery export jumped from $16 million in 2009 to $20 million in first five months of 2010. Notably, its export turnover of May was as high as the combined figure of all four previous months.

Statistic general Office (GSO) reported that the country’s gold export in Jan-May brought in $800 million, a slight reduction compared with the same period of 2009.

Nguyen Ngoc Que Chi, general director of Sacombank Jewellery Co (SBJ) said that the exciting gold transaction in May early was due the reason that companies took advantages to purchase gold when the domestic price remained low. Meanwhile people almost raced to sell gold only. Finally, when the companies stopped purchase, the domestic gold market was frozen again.

Till now, there is no official statistics that how much gold is imported into Vietnam. In previous years, Vietnam was one of the world’s big gold importers, including official and unofficial import channels.

Statistics of SBV showed that total volume of imported gold in 2006-2007 was about 281 tonnes. In 2009, the import volume according to the state’s official figure was not high. This year Saigon Jewellery Co (SJC) particularly is granted a quota of importing six tonnes of gold.

According to World Gold Council, Vietnam’s total gold deposits only accounted for 20-30 percent of gold volume kept in residents. A specialist estimated that the gold export via official quotas in last three years reached $2.7 billion.

On the average price of $30 million per tonne, thus about 90 tonnes of gold were re-exported and converted into 51.300 trillion dong for investment and business.

Tuoitre

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