Latest News from the State Bank of Vietnam (SBV): A Total of 16,800 Taels of SJC Gold Bars Offered in Today’s Auction
The State Bank of Vietnam (SBV) has announced that a total of 16,800 taels of SJC gold bars will be auctioned this morning. Participants are required to pay a 10% deposit, with a reference price of 82.9 million VND per tael for calculating the deposit amount. The minimum bid volume for each participant is 14 lots (equivalent to 1,400 taels), and the maximum bid volume is 20 lots (equivalent to 2,000 taels).
The bidding increment is 10,000 VND per tael, and the minimum bid increment volume is 1 lot (100 taels).
SBV will hold its fourth gold bar auction on the morning of May 3.
The auction regulations remain unchanged compared to the previous three auctions. Notably, out of the three previous gold bar auction announcements by SBV, only one auction was successful, with only 3,400 taels of gold sold.
The remaining two auctions were canceled due to insufficient participation. The most recent cancellation occurred on April 25, when only one entity submitted a bid.
Experts believe that the auction may continue to underperform due to SBV’s unchanged auction conditions, as these conditions have deterred businesses and credit institutions from participating.
According to Dinh Nho Bang, Vice Chairman of the Gold Business Association, the lack of participation indicates that the gold auction regulations still contain impractical conditions and fail to sufficiently mitigate risks for participating organizations.
If SBV revises the auction conditions to make them more attractive and reduce risk for businesses, more organizations may participate.
Experts note that capital shortages are currently a significant challenge for many businesses, which may impact their decisions to participate in the auction, as they would be required to purchase large quantities of gold. SBV has set the minimum number of winning gold lots at 14 lots, equivalent to 1,400 taels.
Expert Tran Duy Phuong analyzes that while gold supply among businesses is limited, it is not severely lacking. Therefore, businesses and organizations participating in the auction only aim to purchase the amount of gold necessary to meet their business needs.
“For example, if they sold approximately 1,000 taels last week, they will need to purchase 1,000 taels to balance their sales and purchase a slight surplus for retail or other needs. They will participate in the auction at this point.
However, if they only sold around 500 taels, and the auction regulations require them to purchase a minimum of 1,400 taels, supply will exceed demand. Consequently, this condition is discouraging businesses from participating in the auction,” he said.
Additionally, the expert believes that gold prices are currently volatile and unpredictable, and no business would purchase gold for speculative purposes. Therefore, demand is not particularly high.
They only need to purchase a quantity sufficient to cover their sales or a slight surplus. “For instance, if they are short 1,000 taels of gold, they will purchase around 1,200-1,400 taels. However, if they are only short around 500 taels and are required to purchase 1,400 taels, it becomes challenging.
If SBV adjusts the conditions, allowing gold purchases as low as 400-500 taels, it will undoubtedly attract more businesses to participate,” the expert suggests.
Associate Professor Dinh Trong Thinh believes that SBV should review the reference price. The 10% deposit requirement, combined with a high reference price for deposit calculation, has prompted businesses and banks to carefully consider their participation in the auction.
“To participate in the auction with a substantial amount of money, businesses must determine how to conduct profitable business operations. Consequently, to enhance the effectiveness of future gold auctions, SBV needs to establish reasonable bid prices that align with businesses’ requirements and attract their participation,” Thinh said.
In today’s scheduled auction, the reference price for deposit calculation is 82.9 million VND per tael, significantly higher than the winning bid prices of the April 23 auction (highest: 81.33 million VND per tael; lowest: 81.32 million VND per tael).
However, many experts argue that SBV should avoid setting excessively low bid prices. If businesses and credit institutions win bids at low prices, while SBV is unable to import gold from the global market at reasonable prices, the bid contracts will be canceled as per regulations.
“Although Vietnam currently enjoys the advantage of domestic gold prices being significantly higher than global gold prices, if global gold prices increase excessively, exceeding the profit margin, the bid contracts will be canceled to prevent losses to the state budget. The reference price must be determined after careful consideration of factors influencing global gold price increases and decreases, which is a challenging task,” an expert affirmed.
