The Golden Opportunity: Banks Prepare to Sell Gold to the Masses

In an effort to successfully achieve the goal of stabilizing the market as directed by the Government and the Prime Minister, the State Bank of Vietnam (SBV) will sell gold directly to four state-owned commercial banks, including Vietcombank, Vietinbank, BIDV, and Agribank. These banks will then sell the gold directly to the public, with the aim of narrowing the gap between domestic and international gold prices to an appropriate and sustainable level.

Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, commented on the SBV’s decision to sell gold directly to the four commercial banks, stating that this is a necessary solution in the current context to effectively implement the Government and Prime Minister’s orientations and directives in three aspects:

First, the supply of gold bars will be increased in a concrete and direct manner, as the gold will not be hoarded or speculated on, and will go directly to consumers.

Second, ensuring more reasonable pricing based on the SBV’s reference to world gold prices plus necessary expenses, thereby contributing to reducing the gap between domestic and international gold prices.

Third, ensuring greater transparency as the information on gold purchases and sales will be publicly disclosed, and gold transactions will be conducted with electronic invoices. This approach also presents minimal obstacles as it can utilize the branch networks of the state-owned commercial banks.

Mr. Le Ngoc Lam, CEO of BIDV, shared that this is a correct decision made by the SBV to stabilize the gold market. BIDV has implemented a set of specific solutions, including the following:

First, disclosing the list of branches where gold bars will be sold and the date of the commencement of gold bar sales on the Bank’s website.

Second, finalizing the procedures for establishing gold bar purchase and sale relationships with the SBV.

Third, establishing a distribution network in key gold business locations such as Hanoi, Ho Chi Minh City, Danang, Can Tho, and Ba Ria – Vung Tau. Initially, gold sales will be launched in Ho Chi Minh City and Hanoi.

“We are committed to the Government and SBV’s policy of market stabilization and therefore do not set profit targets. We will supply gold at appropriate prices based on the purchase price from the SBV. This will contribute to realizing the goal of reducing the gap between domestic and international gold prices,” affirmed BIDV CEO Le Ngoc Lam.

Regarding the gold sale price and timing, Mr. Lam shared that on Monday (June 3, 2024), the SBV will sell gold directly to the four state-owned commercial banks at a price determined by the SBV, based on world gold prices and the goal of reducing the price gap between the domestic and international markets compared to the present.

The participating commercial banks, such as BIDV, will publicly announce the gold bar sale prices on their official websites for the convenience of the people.

“We are committed to the Government and SBV’s policy of market stabilization and do not set profit targets. We will supply gold at appropriate prices, primarily aiming to reduce the gap between domestic and international gold prices,” emphasized Mr. Lam.

SBV Deputy Governor Pham Quang Dung stated that with their extensive networks, all four state-owned commercial banks have prepared the necessary conditions to organize gold sales directly to the people.

“With abundant resources and existing tools, the SBV has the capacity and determination to stabilize the market and achieve the aforementioned goals. The gap between domestic and international gold prices will be quickly and sustainably narrowed,” said Mr. Dung.

SJC gold bar prices continued to fall sharply after the news that the SBV would sell gold to commercial banks instead of conducting auctions as before. In the early morning of May 30, SJC gold bar prices were listed by SJC Company at 84.5 million VND/tael for buying and 88 million VND/tael for selling, a significant drop of nearly 4 million VND/tael compared to the previous day. As of 4:00 PM, prices rebounded but remained lower than the previous day, with buying at 86.3 million VND/tael and selling at 88.8 million VND/tael.

Dr. Can Van Luc assessed that strengthening inspection and supervision of gold enterprises and business establishments would also help reduce gold hoarding, smuggling, and policy profiteering.

In addition, Dr. Can Van Luc suggested amending Decree 24 to clarify the scope of gold management (mainly gold bars, while gold jewelry should be left to market self-regulation), delineate the roles of market supervision more clearly, and enhance the transparency of the gold market (such as requiring transactions with electronic invoices and non-cash payments…).

“At the same time, developing the economy, stabilizing the macro-economy, and creating a favorable and open business environment will also be a fundamental solution to reduce goldization in the economy. With such a synchronized set of solutions, both in the short and long term, the gold market will become more stable, and prices will be closer to international levels…,” emphasized Mr. Luc.