Vietnam needs to tackle gold market now: Insider

Vietnam needs to tackle local gold market now, said Do Minh Phu, CEO and general director of DOJI Gold and Gem Group, suggesting three key solutions to stabilize local gold market and keep it in-check.

Do Minh Phu, DOJI‘s CEO and general director suggested three key solutions to stabilize local gold market and keep it in-check.

Local gold prices must closely track global ones, Phu said, specifying that it’s necessary to narrow the gap between local and global prices (converted). A normal gap should range from $15 to $30, depending on the market supply/demand and other conditions, he added.

The SBV should take actions to keep a healthy gold market by tackling “goldization” in the economy and the public, he said.

Phu also suggested the central bank to drive a big volume of gold in the pubic to the banking system, adding that the public’s gold holdings are estimated at $16-18billion.

The SBV must take drastic measures to solve problems comprehensively in the gold market, he said, suggesting 5 actions for the central bank:

Firstly, picking up the public’s sentiment, avoid gold shortage and speculation with more flexible policies for gold.

Phu cited an example when the SBV actively granted gold import quota for a certain period to meet the market demand for gold and help ease gold turbulences.

Secondly, it should mull some policies to drive physical gold trading out of focus.

As many as 80% of transactions at local gold-trading firms are physical gold as other forms including gold trading on foreign accounts, gold exchanges, derivatives, etc were already banned, Phu said, concerning that it might be not good if the majority of physical gold transactions hold on.

Thirdly, encouraging local firms to produce gold jewelries for export (by creating favorable tax policies) and for domestic demand.

Fourthly, setting up reasonable policies to attract the public’s gold holdings to the banking system, helping save gold resources for the economy.

The SBV has restricted gold conversion into the dong at local lenders to reduce risks, Phu said, adding that it should have reasonable tools such as using interest rates, protecting value of the dong after the conversion via insurance, gold certificates, etc. – Stoxplus.com

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