SJC monopoly may harm the gold market

VietNamNet Bridge – Under the new decree on the gold market management, the State Bank of Vietnam assigns SJC as the only bullion gold maker. Experts have warned that this may lead to the short supply in the time when the market burns with fever.





On September 16, SJC gold prices were quoted at 46.68-46.78 million dong per tael (buy and sale), down by 200,000 dong per tael in comparison with some days ago. Meanwhile, the world price reportedly decreased by four dollars per ounce to 1770 dollars per ounce.

However, despite the clearly quoted prices, the gold transactions on September 15 and 16 were problematic. Some gold shop owners only accepted to pay the prices lower than the quoted prices, or refused to buy gold.

Sellers at a disadvantage

On the morning of September 15, Nguoi lao dong’s reporters went to the Kim Phat Manh Gold Shop on Hanh Thong Tay market area in HCM City to sell two taels of SJC gold.

After checking the products, the shop owner said the gold bullion had “errors” and only paid 46.48 million dong per tael.

At the Kim Phat Hong gold shop in Go Vap district, the reporters were also told that the bullion were distorted and that the actual trade prices would be 200,000 per tael lower than the quoted prices.

Especially, the Tan Tien Gold Shop owner only accepted one tael, while refusing to buy the other, which he said was deformed.

Over the last 10 days, the gold domestic price has been increasing more rapidly than the world price, which has prompted people to sell gold to get profit, thus making the gold price decrease.

Analysts have said that gold shop owners now deliberately devaluate gold products. However, they believe that the main reason behind this is that the State Bank only assigns SJC to process bullion gold. To date, many tons of non-SJC gold still has not been converted into SJC gold.

As a result, the market witnessed short supply on the days when the demand increases sharply, thus prompting sellers to push the prices up, widening the gap between the domestic and the world prices.

Gold still at stocks

Under the new decree, non-SJC gold would have to be converted into SJC gold. Therefore, enterprises have to queue up to wait for their turn to have their non-SJC gold converted.

Under the currently applied procedures, the State Bank would have to verify the origin and the legitimacy of the gold to be converted. After that, SJC, which processes bullion gold for the central bank, has to inspect, classify the gold products based on the gold content. Especially, the central bank even monitors the process of converting non-SJC into SJC gold.

The complicated procedures explain why the conversion process has been going very slowly, leaving many tons of gold in enterprises’ stocks, which means that multi billions of dong have been left idle which cannot bring profits. This has forced enterprises to refuse non-SJC gold or pay 2.5-3 million dong per tael lower for non-SJC gold.

Some finance experts have suggested that the State Bank assigns more companies to make bullion gold to settle the current problem. They believe that the state monopoly would help prevent the illegal gold imports and help stabilize the dong/dollar exchange rate. However, one SJC would not be able to ensure the timely supply to the market.

The experts say authorizing more companies to make bullion gold would not a big problem. Seven enterprises once made bullion gold and their machines have been left idle since the new decree took effect.

Compiled by C. V
 
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