The golden age of gold is gone

The in-kind gold market is quiet, gold exchanges have been shut down, and opportunities to export gold for profit are few. Goldsmith companies in Vietnam now face unfavorable conditions.

T, the owner of a small gold shop in Hanoi, complained that there are not many buyers these days. In 2009, he purchased and sold tens of taels daily. Presently, he can sell only several a day.

T. explained that even though his shop is small, he still tries to keep the gap between sale and the purchase prices at a low level, just 60-70,000 dong per tael, so that he can attract customers.

Not only small gold shops, but big goldsmith companies are confronting many obstacles. 2009 was considered a good year for the gold business, thanks to the mushrooming of gold exchanges and the bustling in-kind gold market. Now things have changed.

Nguyen Cong Tuong from Saigon Jewellery Company (SJC) cited how gold trading floors have been shut down, while the demand for purchasing bar gold as assets has been low. In the last two days, SJC could only sell some 1000 taels per day, but in 2009 they sold 10-15,000 taels per day.

Sacombank-SBJ also reported that only 1000 taels are traded every day instead of 2000 as seen last year.

“Experts said that once the gold trading floors shut down, the in-kind gold market would become more bustling. However, contrary to the prediction, the in-kind gold market has been very quiet with investment demand down sharply,” explained Ton The Vinh Quyen, Business Director of Sacombank-SBJ.

According to Quyen, the high price of gold, at 27-28 million dong per tael, is the main reason that people hesitate to purchase gold. The gold price stabilized at 26-28 million dong per tael since the beginning of 2010, so surfing investors do not see opportunities to profit from investment deals.

Banks have slashed gold deposit interest rates from 3-5 percent per annum to less than one percent, so many people have given up the idea of purchasing gold to deposit in banks.

Asia Commercial Bank (ACB), for example, offers 0.3 percent for gold deposits. In order to enjoy 1.2 percent per annum, customers must deposit 2000 taels at minimum, worth 5.6 billion dong, for 13 months. Meanwhile, with 5.6 billion dong, customers can make dong deposits to enjoy much higher interest rates. The dong interest rates are now very attractive, at over 10 percent per annum.

Unlike previous years, when people rushed to buy gold when the prices went up and rushed to sell when prices dropped, investors nowadays are smarter: they sell when prices rise and purchase gold when prices plunge.

Facing so many difficulties, gold trade companies look for alternative avenues. Le Xuan Tung, General Director of Phu Quy Jewellery Company, observed that, besides trading bar and jewelry gold, Phu Quy has invested in real estate. Still, the good material facilities that the company had installed when it was a member of ACB Gold Trading Centre have been left idle.

As for Sacombank-SBJ, besides the main product – SBJ bar gold, the company now focuses on making jewelry and offering other services as well. The company has been trying to expand the shop network to fulfill its yearly business plan.

Though agreeing that 2010 is a difficult year for gold trade companies, Tung added that the situation is not too worrisome. He noted that ups and downs are seen regularly when doing business.

Thoi bao Kinh te Vietnam

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