Gold Bar Auction: Central Bank to Increase Supply and Narrow Price Gap
SJC Gold Surges Over 10 Million VND/Tael
On April 20th, SJC gold bars were offered for purchase by businesses at 82 million VND/tael and sold for 84 million VND/tael, a 200,000 VND increase from the previous day. Since the beginning of the year, SJC gold prices have risen by approximately 10 million VND/tael. 24K gold ring and jewelry prices traded around 74.8 – 76.7 million VND/tael, a 200,000 VND decrease from the previous day. Since the beginning of the year, gold ring prices have risen by approximately 14 – 15 million VND/tael.
Globally, the price of gold closed the weekend around $2,392 USD/ounce, down from its peak of over $2,400 USD/ounce the previous day. Since the beginning of the year, the precious metal on the international market has increased by over $330 USD/ounce. Global gold prices are currently approximately 3 million VND/tael lower than ring gold and 10.5 million VND/tael lower than SJC gold.
The discrepancy has narrowed considerably in recent days with the announcement that the State Bank of Vietnam (SBV) will intervene in the market through an auction of gold bars. However, the gap remains significant considering that domestic gold prices have been disconnected from global prices for over a decade and businesses have been prohibited from importing raw gold for jewelry and decorative production.
Gold bar trading at a store in Ho Chi Minh City. Photo: TAN THANH
The market anticipates that the SBV’s auction of gold bars will increase the supply in the market, further narrowing the gap with global gold prices. This is a request that has been repeatedly made by government leaders to the gold regulator. According to the SBV, the gold bar auction will be held at 10:00 AM on April 22nd at the State Treasury’s Foreign Exchange Reserve Management Department. The total amount of gold bars to be auctioned is 16,800 taels. Each transaction lot will consist of 100 taels of gold. The gold bars sold will be SJC gold bars produced by the SBV. Participating financial institutions and businesses must deposit 10%. The reference price for calculating the deposit is 81.8 million VND/tael (this price is only used for calculating the deposit). The reference weight for calculating the deposit value is the expected bidding quantity of each participant. The minimum bidding quantity allowed per participant is 14 lots (equivalent to 1,400 taels). The maximum bidding quantity allowed per participant is 20 lots (equivalent to 2,000 taels). Each bidder can only register one minimum bid equal to or higher than the floor price announced by the SBV. With a reference price of 81.8 million VND/tael, the total value of this auction is over 1,300 billion VND.
The SBV will send out a notification one day before the auction. Once the floor price has been announced, participating financial institutions and businesses will begin filling out bid forms. Participants have 30 minutes to decide on their volume and purchase price. One hour after the auction closes, the SBV will announce the results.
Need for a Fundamental Solution
Mr. Dao Xuan Tuan, Director of the Foreign Exchange Management Department of the SBV, stated that the SBV, in line with the Prime Minister’s instructions, has thoroughly prepared for the auction of SJC gold bars (which the SBV has produced and has in stock). The afternoon of April 19th, the SBV sent a notification to 15 eligible financial institutions and businesses to organize the auction on April 22nd.
Many experts and businesses agree that the auction of gold bars is an appropriate solution considering the need to increase the supply of gold bars in the market after many years of SJC gold dominating the market and being disconnected from the global market. According to economic expert Dr. Nguyen Tri Hieu, the SBV’s auction of gold will undoubtedly impact gold supply and prices. The gold sold by the SBV to financial institutions and businesses through the auction will increase the supply of gold in the market, helping to cool down the current “price fever.” The current supply shortage and high demand have created an imbalance in the gold market, driving gold prices higher. “The auction requires a significant amount of gold to maintain stability. However, in the long run, the government should consider revising and adjusting Decree 24/2012/ND-CP on gold market management to better align it with current realities,” said Dr. Hieu.
Regarding the policy for managing the domestic gold market in the coming period, Mr. Dao Xuan Tuan stated that the SBV has submitted a report to the Prime Minister on the review of Decree 24/2012/ND-CP, which included input from various ministries and agencies. The SBV has submitted to the Government a proposal to revise Decree 24. According to the proposal, Decree 24 has had positive effects over the past years and it is now appropriate to revise it to align with current conditions, particularly the elimination of the State’s monopoly on SJC gold bars and the introduction of additional gold bar brands.
In addition to SJC gold bars, raw gold for producing gold rings and jewelry is also a major concern for businesses. At the company’s 2024 annual general meeting, Ms. Cao Thi Ngoc Dung, Chairwoman of Phu Nhuan Jewelry Company (PNJ), shared, “The company has faced challenges due to limited raw materials, sometimes even having no gold for production. At the time of the 2024 God of Fortune holiday, the company had to reserve gold for production in October-November of the previous year, and in reality, the gold products supplied to the market did not meet expectations. The company is not worried about sales, but it lacks inputs.” PNJ’s management also believes that it cannot stock up on raw gold for the whole year because gold prices fluctuate every day and every hour, so it has to calculate when and how much to buy to secure its cost of production. On days when the quantity of raw gold imported is insufficient, the company must accept a reduction in production.
Can Tho: 39 Gold Stores Punished
On April 20th, the Market Management Department (MMD) of Can Tho City announced that the department’s head had signed the decision to issue a plan for special inspection of jewelry and gold products in the area. Following the issuance of the plan, many gold stores in the city center closed their doors. For example, on Vo Van Tan and Nguyen Thai Hoc streets (Ninh Kieu district), up to four stores remained closed. To date, the MMD of Can Tho City has prosecuted 39 gold stores, imposing a total of 659.5 million VND in fines. Violations include: not displaying prices at the designated location; selling products with labels that do not contain the required information, etc. Mr. Duong Tan Hien, Deputy Chairman of the People’s Committee of Can Tho City, said that the city has about 220 companies and stores trading in gold, jewelry, and art, including four businesses trading in gold bars. Recently, two gold stores have followed proper procedures to close; some gold stores have closed due to fluctuating gold prices. “Any store closing will be inspected by the authorities, it’s not like they can avoid inspection by closing,” said Mr. Hien.
Dr. CAN VAN LUC, Member of the National Financial and Monetary Policy Advisory Council:
Increase transparency, increase supply
The SBV’s gold auction aims to increase transparency and supply in the economy, thereby reducing the price discrepancy between domestic and international markets. In 2013, the SBV also used the gold auction tool to cool down gold prices. Importing a certain amount of gold is appropriate because domestic supply is insufficient. However, the amount imported should be calculated to align with the current situation in order to control supply and demand, ensure Vietnam’s foreign exchange reserves, and contribute to stabilizing exchange rates and the macroeconomic situation. The SBV has developed a plan to address the issues in the gold market; it must ensure consistency in its implementation going forward.
Mr. HUYNH TRUNG KHANH – Senior Advisor to the World Gold Council in Vietnam, Vice Chairman of the Vietnam Gold Trading Association:
No concerns about people rushing to buy gold
The gold bar auction is a short-term solution, but the long-term priority remains the revision of Decree 24 to eliminate the monopoly on SJC gold bars and introduce additional gold bar brands. To narrow the price gap between SJC gold and global gold, it will depend
