Low-grade gold scam leaves local dealers holding the bag

The appearance of impure gold alloys on the market has jewelry companies scrambling to avoid the alloy and minimise their losses.

Jewelry companies in HCM City late last month began to report that some gold alloy currently on the market was of low purity despite testing equipment showing a purity rate of 99.99 per cent, according to the Viet Nam Gold Trading Association (VGTA).

The material began to appear in Ha Noi this week.

“The first victims of the huge losses from the gold impurities have been jewellery companies, definitely not consumers,” VGTA expert Tran Quoc Quynh told Viet Nam News. “Consumers often sell gold where they bought it, so dealers must buy according to the certified purity recorded on their own certificates.”

Nguyen Van Dung, chairman of the HCM City Association of Fine Arts, Gold, Jewelry and Gemstones, said that some dealers bought the alloy and processed it into jewelry, certifying its purity at huge losses.

“The impurities of this particular alloy will not show up on normal testing equipment,” Sai Gon Jewelry Co (SJC) director Luu Quang Dien said to Viet Nam News. “If small companies or shops don’t have hi-tech equipment, they should cut out samples for testing.”

Major gold companies like Agribank Gold Joint Stock Co (AJC) and Bao Tin Minh Chau also told Viet Nam News that they had found impurities in their gold but the quantity was very small. They said they were in meetings to discuss measures to solve this problem, and the VGTA was compiling statistics related to the amount of impure gold alloy on the market.

“VGTA plans to set up a special institution which will test the purity of gold products and materials before they are put on the market,” said Quynh.

The nation’s 10,000 gold dealers and jewelry makers buy raw materials from a wide variety of sources, including gold supplies floating on the market or even gold smuggled into the country for use in jewelry manufacturing.

“The market has its rules,” Quynh said. “It will manage by any means to survive.”

SJC, Phu Nhuan Jewelry, Agribank Jewelry, and Sacombank Jewelry all reported gold prices up yesterday by VND150,000 over Thursday to VND37.4-37.5 million (US$1,825-1,830) per tael, driven by upward global prices.

Spot prices surrendered early gains yesterday to trade nearly flat at $1,502.89 per ounce [one tael equals 1.2 ounces], as the dollar perked up and expectations mounted for US inflationary pressures to ease. — VNS

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