Should the State Bank Continue to Sell Stabilization Gold?

In response to VTC News, gold expert Tran Duy Phuong asserted that the time has come for the State Bank of Vietnam (SBV) to conclude its mission of stabilizing the domestic SJC gold bar market. Over four months ago, before the gold bar auctions and sales to the public through SJC and state-owned banks, the domestic gold price was nearly VND 20 million higher than the world price. Currently, the price difference stands at VND 4-5 million only.

“The SBV has successfully narrowed the gap between domestic and world gold prices. Thus, it’s time for the SBV to discontinue its stabilization efforts through the current distribution channels,” Mr. Phuong stated.

According to Mr. Phuong, the SBV has likely released around 300,000 taels of SJC gold bars into the market over the past four months, alleviating the market’s gold thirst. Those with a substantial gold demand have likely fulfilled their needs. This is evident in the reduced price difference between the black market and the SBV’s sales, which now stands at VND 1 million, indicating a saturated gold demand.

“Only those in urgent need of gold, unable to wait for bank purchases, would accept this price difference,” affirmed Mr. Phuong.

Mr. Phuong believes that with the amount of SJC gold bars supplied to the market, the gold market can self-regulate based on supply and demand without the SBV’s intervention.

“The SBV should step back to an observational role and allow more banks and enterprises to engage in gold bar trading. If instability arises, they can intervene then. However, I believe that, for the next six months at least, the gold bar market will remain stable, fluctuating with world gold prices without the significant discrepancies of the past,” Mr. Phuong opined.

Regarding Vietcombank’s recent announcement of a one-day extension for gold delivery after a customer’s successful purchase registration, Mr. Phuong attributed this to proper and sufficient service rather than customer inconvenience. “Gold demand is no longer as urgent and frenzied as before, nor are there long queues for gold bar purchases. Some customers even register successfully but fail to collect their gold.

Therefore, to ensure accurate and sufficient service and maintain financial security, Vietcombank has added one day to allow time for aggregating the number of gold buyers and requesting the corresponding amount from the SBV. This ensures customers receive their full gold allocation while minimizing the bank’s risk in a volatile market,” he explained.

Meanwhile, economist Dr. Nguyen Tri Hieu analyzed that gold bars remain a safe haven for wealth preservation among the populace. Through wars and economic downturns, gold has retained its value and continued to appreciate. The mindset of “having money means buying gold” is deeply ingrained in the populace. In contrast, the stock market is a more recent development, and real estate is not affordable for everyone… Hence, gold remains the primary choice for most people, especially workers.

Consequently, the requirements imposed by banks create certain difficulties for gold buyers, possibly giving the impression that the regulator is reluctant to sell. “If the gold price drops to VND 50 million but people find it challenging to purchase, it won’t make much difference,” said Mr. Hieu.