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Gold prices chaotic, State Bank’s Governor denies short gold supply   2010-09-30 - Tuoi tre, Dan tri

The gold price skyrocketed on September 29, hitting a new record high of 31.35 million dong per tael, when the world’s price climbed to the record price of $1,313 per ounce. Meanwhile, the Governor of the State Bank of Vietnam Nguyen Van Giau believes that it is not the right time to allow to import gold, saying that the gold supply is not as short as people think.


The gold price slightly decreased late yesterday to 31.2 million dong per tael, when the world’s price reduced to $1,310 per ounce. However, the domestic price has been staying firmly at a high level which is still higher by 430,000 dong per tael than the world’s price.


The sharp gold price increases have caused headache to many people. Nguyen Thi Thanh at Thanh My Loi Residential Quarter in District 2 in HCM City, borrowed seven taels of gold to purchase an apartment two years ago, when the gold price stayed at 17 million dong per tael. Now since the gold price has increased by nearly two folds, Thanh has to pay more money to purchase gold to pay debts.


However, experts believe that the gold price has been increasing sharply not because of the short supply. They have blamed the sharp price increases on the speculation.


Nguyen Ngoc Que Chi, General Director of Sacombank’s Jewellery Company (SBJ), also affirmed that the supply is not short. She said on September 29 morning, her company traded 4,000 taels of gold with gold shops. Very few people made transactions yesterday because the prices were too high.


A senior executive of the Hanoi Branch of the Saigon Jewellery Company (SJC), said though gold shops quoted sky high prices, there were very few transactions. Two days ago, SJC sent 30 kilogrammes of gold, or 800 taels to Hanoi for sale, but the volume has not been sold out yet. He affirmed that the market does not lack gold, and people can purchase how much they want, if they accept high prices.


A lot of enterprises have asked for the permission from the State Bank of Vietnam to import gold to sell domestically, when the domestic prices keep rising. However, the enterprises themselves understand that the proposal may be rejected by the central bank, especially when the Government is trying to apply measures to control trade deficit.


According to Chi, it is too risky to purchase gold at this moment, because buyers will have to spend big sums of money to buy gold. In order to have 10 taels of gold, one will have to pay 310 million dong. If the gold price increases by 100,000 dong per tael, he will make a profit of one million dong. However, if the gold price decreases, he will incur heavy loss. Meanwhile, the gold price decreases are likely to happen, because the domestic price is higher by 430,000 dong per tael than the world’s price, and the price would drop dramatically if there is any bad news.


Governor of the State Bank of Vietnam Nguyen Van Giau, in the latest statement, affirmed that the central bank does not see any signs of short supply.


“The gold price has been escalating over the last three days. However, we have found out that it is not because of the short supply. The demand for gold remains normal. Especially, no one purchased gold when the price reached its highest peak,” Giau told Dan tri newspaper.


Giau affirmed that the gold price has been escalating in recent days just because of the speculation, saying that the State Bank will join forces with the market control agencies to clarify the matter.


He went on to say that it is now not the right time to import gold. “Gold is not a kind of essential goods. Meanwhile, the gaps between the domestic and international prices have been unstable. Why should we import gold, then?” he said.


“We must not arbitrarily import gold which may cause uncertainties to the national economy,” he added.

When asked about the gold deposits at banks, Giau said that the deposit balance has reached 95 trillion dong.

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