State Bank gets tough on gold market

Domestic institutions may no longer receive central bank approval for gold plate production.

State Bank governor Nguyen Van Giau revealed the bank would submit a roadmap to the government to discard gold plate trading operations.

The roadmap might stop granting licences for local enterprises to produce gold plate and then stop local institutions from selling gold plates to residents, but keep buying plates from residents. The central bank will give 18 months for residents to sell gold it to institutions before stopping it.

“At last, the central bank will be the buyer for big volume of gold offer from institutions but the price will be based on the price of the world market at that time,” said Giau.

Domestic institutions producing gold plate at present include Vietnam Agribank Gold Corporation, Phu Nhuan Jewellery Company, Bao Tin Minh Chau Jewellery and Saigon Jewllery Company.

This is an implementation of Resolution No11 which ordered the State Bank to finish the draft of gold trading operation management decree in the second quarter of 2011.

The decree content will direct the market with selective gold importers, discard gold plate trading operation on free market and preventing effectively illegal gold trading through border-gates.

It is most likely the capital from residents had flowed into gold. Phu Nhuan Jewellery, for instance, reported net sales of gold plate in February. The Ho Chi Minh City firm reached top sales on February 12 with 2,200 taels a day. The sales volume was reportedly high with 2,000 taels on February 24.

The State Bank has played hard ball with the erratic gold market in last October when it banned the conversion of less than 30 per cent deposit in gold to currency in any type for gold transactions as local credit institutions had done for the past 10 years.

It also gave an eight month period for credit institutions to balance their books to meet conversion capital requirements with a June 30 deadline, this year.

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