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Additional quotas for gold imports proposed   2008-11-20 - DTCK

The domestic gold price is now much higher than the world’s price, while domestic demand remains high. However, the quota for gold imports has run out. Gold trading companies have urged the State Bank of Vietnam to grant more quotas for gold imports.


On November 14, the Saigon Jewellery Company SJC quoted gold at VND16.4mil/tael (purchase) and VND16.49mil/tael (sale). At the same time, in the world, gold was traded at $729.75-730.25/oz. With the VND/US$ exchange rate of VND16,985/US$1, the world’s gold price is VND15.316-15.327mil/tael. As such, the domestic price is VND1.16mil/tael higher than the world’s price presently.


On the Saigon Gold trading floor, the morning closing price on November 14 was VND15.493mil/tael, which means that the gold price on the trading floor was VND210,000/tael higher than the world’s price.


On November 18, the SJC gold was VND1.022mil/tael higher than the world’s price, while the trading floor’s price was VND76,000/tael higher.


The trading floor’s price proves to be closer to the world’s price than the in-kind price. This has been explained by the fact that gold trading floors have closer links to the world.


Importing gold?


Gold trading firms in Hanoi all say that the state should grant quotas for importing gold at this moment to satisfy the high domestic demand.


A representative of Phu Nhuan Jewellery Company also believes it is necessary to allow gold imports at this moment, but said that imports need to be controlled because a massive volume of imports would lure big money into the gold market, leading other business sectors to lack investment capital.


Dinh Nho Bang, Chairman of the Vietnam Gold Association, said that there are at least two reasons to allow gold imports at this moment. First, the world’s price is now at a lower level, so if Vietnam imports gold now and re-exports later when the price goes up, it will earn good profit. Second, the big gap between the domestic and world’s price has been causing difficulties for state management agencies in controlling illegal gold imports and in forex management.


Since June 2008, when the State Bank of Vietnam ordered a halt to gold imports, there have been big gaps between the world’s and domestic prices.


Currently, the government of Vietnam is still pursuing measures to curb inflation and reduce the trade deficit. Therefore, experts have warned that Vietnam should keep cautious when allowing gold imports, which account for 10% of total trade deficit value.


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