Thursday, January 17th 03:17 PM IST

Stage set for Vietnam black Gold marketeers

# Vietnam gold  # SBV  # SJC  # gold monopoly  

Nearly six thousand other gold shops would be weeded out from the bullion gold market, and they would only be able to trade jewelries.

HANOI(BullionStreet): Majority of the gold companies evicted by Vietnam's new gold regulation would become black marketeers and remain in the sector, analysts said.

An estimated 4000 small gold shops had been shut down already in Vietnam before the new decree took effect in early 2013.

Nearly six thousand other gold shops would be weeded out from the bullion gold market, and they would only be able to trade jewelries.

A question has been raised about the fate of the 5600 gold shops which cannot trade bullion gold.

Another question has been awaiting the answer that what will happen if there are only 2,400 gold transaction points nationwide, with a half of them located in HCM City and Hanoi, while seven northern provinces would have not any retail points.

It is obvious that Vietnamese people won’t give up the habit of hoarding up gold as a kind of assets unless they feel secure about the value of the local currency. As such, the demand for gold trading would be always exist.

According to the currently valid Decree No. 24 only the state were allowed to make bullion gold. Meanwhile, sources have said the central bank is considering tightening the jewelry market as well.

Analysts added that with the strict requirements on gold trading companies, only 17 credit institutions with 2,400 transaction points nationwide have been licensed to trade bullion gold.

They believe that the monopoly would create a Vietnamese gold market which is isolated from the world market, which means that the domestic gold prices would not have relations with the world’s prices and any fluctuations in the world.

If so, analysts say, the domestic price would be always higher than the world’s price. The price gap of VND3-5 million dong per tael between the domestic and world price has been existing for the last many months.

Analysts have warned that the leave of private enterprises would lead to the fact that Vietnam’s gold trade cannot develop and integrate into the world market.

Regarding the issue, the State Bank of Vietnam has stated that the price gap would not be a problem of its concern, because this would in no way influence the dong/dollar exchange rate.

However, economists have pointed out that the gold price performance would be unpredictable, which means that businessmen will not be able to foresee the price tendency to draw up their business plans.

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