People queue up to buy gold in Ho Chi Minh City

In Ho Chi Minh City people queued up Tuesday to buy gold bullion from Saigon Jewelry Co, which sells the metal slightly cheaper, snapping up 9,000 taels.
SJC, which has a 90 percent market share in Vietnam and sells a tael of 37.5 grams 100,000-200,000 dong cheaper than other shops, reported 10 times the normal sales.

Its retail sales division said people lined up to buy though the price rose in the morning, some buying more than 20 taels.

Nguyen Thanh Long, general manager of SJC, said the company has finalized procedures for import of 500 kg of gold.

SJC assured there would be no scarcity since it had received approval from the central bank for unlimited gold imports.

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Co, the other major gold trader, said PNJ sold around 2,500 taels and bought 700 taels Tuesday.

Cuc told that PNJ too had gold stocks after importing a large volume Monday.

New signals in gold management

At a recent press briefing central bank governor Nguyen Van Binh said the bank would continue to “actively and promptly” allow gold imports to prevent shortages.

This would stabilize the market and limit speculation and smuggling.

The appropriate gap between domestic and international gold prices was around 400,000 dong a tael.

If domestic prices were much higher, it would indicate speculation.

The State Bank of Vietnam would adopt flexible mechanisms to take advantage of the gold help by Vietnamese.

One such mechanism in the medium- to long-term would be for the bank to hold the gold for the people.

Since banks had been ordered not to accept deposits or lend in gold, people did not have a channel to invest their gold.

If the central bank accepted gold deposits on behalf of the state, people would have the confidence to deposit their gold, and the central bank could use it for market intervention.

In a statement Tuesday, the central bank said it would continue to keep exchange rates stable to ensure domestic gold prices closely tracked world rates to prevent speculation.

A stable exchange rate would be the basis for the latter, it said.

The overall balance of payments in 2011 would end up with a surplus of $2.5-4.5 billion, it predicted.

The trade balance has improved significantly, with the deficit falling from 16 percent of exports to around 10 percent.

Binh said foreign exchange reserves had increased significantly to an estimated $6 billion, which was enough to stabilize the foreign exchange market under all circumstances. -Tuoitre

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