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Gold may climb to 33 million dong per tael   2010-10-05 - Thoi bao Kinh te Saigon

The gold price has been increasing continuously over the last many years and prices may reach the 32.3 million dong per tael threshold by the end of 2010. In the last 10 years, the gold price has increased by six-fold.


Mr Huynh Trung Khanh

Huynh Trung Khanh, Member of the World’s Gold Council and Deputy Chair of Vietnam Gold Business Association, in the recent interview given to Thoi bao Kinh te Saigon, noted that the current gold price has not climbed to its highest peak, and that the price will continue rising towards the end of the year.


Thoi bao Kinh te Saigon: Gold prices have been climbing steadily to new record highs. Could you please explain the price escalation?


Huynh Trung Khanh: Right at the beginning of the year, the world’s gold price was forecast to exceed the $1300 per ounce threshold by the end of October. In reality, the record price was broken one month earlier than expected.


The slower-than-expected recovery of the US economy is the main reason behind the continued increases. The US Federal Reserve has been keeping interest rates at low levels for the last two years, while the US government now intends to pump more capital into the economy. If this happens, the US dollar will continue to weaken beside other hard currencies, while investors will keep buying gold as the safest shelter.


There are many other factors that support the gold price increases. Especially, gold demand is increasing in India and China in the festival season.


TBKTSG: How will the gold price perform, then?


Khanh: I think that the gold price will keep rising, and the current price will not be the final record. It may hit the threshold of $1360 per ounce by the end of the year and then climb to $1500 per ounce in 2011.


As such, the domestic gold price may hit 32.5-33 million dong per tael by the end of 2010.


TBKTSG: The domestic price has been increasing more rapidly than the world’s prices, which has triggered doubts that the domestic price is controlled by speculators. What do you think about that?


Khanh: It is nearly impossible to control prices in such a big market. The sharp price increases seen in late September should be explained by the fact that the demand for gold, especially from those who stopped losses by selling short before, has climbed sharply. Meanwhile, enterprises cannot meet the huge demand, because people do not sell gold.


However, the big gap between the world’s and the domestic prices will be narrowed soon, because contraband imports, encouraged by the high prices in Vietnam, are flowing into the country.


TBKTSG: You have said that the domestic supply, at some certain times, cannot meet demand. Do you think that the State should allow gold imports now to improve the supply?


Khanh: I do not think that the domestic supply is really short, just because people do not want to sell gold. The market is now really quiet. The State Bank should still allow gold imports, just to calm the public, not to balance supply and demand. The market will return to normal if the central bank allows even just five tons of gold to be imported.


Vietnam has exported 60-70 tons of gold so far, therefore, it would be reasonable if to import some more tons now.


TBKTSG: What should Vietnam do in order to stabilize the domestic market?


Khanh: The State Bank should be more flexible in granting quotas to allow enterprises to import and export gold, which will avoid the supply shortage seen recently. The import volume may be not big, but this will be enough to stabilize the market. Meanwhile, the ban on gold imports will prompt gold to be illegally imported, which means the State cannot collect any taxes.

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