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Domestic gold prices get chaotic, controlled by big enterprises
The domestic gold prices are believed to be controlled by the big enterprises which are holding the biggest market share. Especially, the price in the Vietnamese market is 4.4 million dong per tael higher than the world market.
The domestic gold market earlier this week witnessed a highly volatile trading session when the quoted prices changed 30 times. The purchase price once dropped by 3 million dong per tael, while the sale price once dropped by 1.5 million dong per tael.
Big enterprises control the prices
Bullion gold was the main product put into transactions in the last few days. To date, the State Bank of Vietnam has granted the licenses of making SJC brand bullion gold to SJC, AAA brand gold to Agribank, Rong Vang Thang Long brand gold to Bao Tin Minh Chau, and PNJ gold to PNJ.
SJC brand gold now holds more than 90 percent of the bullion gold market in HCM City. Gold companies all say that SJC gold prices are always referred to as the benchmark for them to set up their prices.
At 3 pm on September 27, tens of people were seen queuing at the gold shop at No.27 Phan Dinh Phung Street, waiting for their turns to buy gold. The gold shop told buyers that they had to wait for gold. A female customer, who asked to purchase 10 taels of SJC gold, was told to wait one hour to get deliveries.
VnExpress also reported that one of Bao Tin Minh Chau’s shops announced the halt of sale at 3 pm on September 27, because the shop ran out of gold. At that time, the gold price quoted by the shop skyrocketed from 43 million dong per tael to 45 million dong per tael within one hour, due to the overly high demand.
General Director of a gold company which is a link of the SJC’s supply chain said that the market price is decided by the market supply and demand. The demand increases dramatically at the same time, therefore, the supply becomes short, which can be compared as the traffic jam occurring when too many vehicles flock to the same routes.
Why is the domestic price still higher by 4 million dong per tael than the world’s price? Is it because the market is being controlled by big enterprises which have the power to set up their prices? An expert said that the high domestic price is not a surprise to him, stressing that the demand and the supply are the two main factors that decide the market prices.
“People rush to purchase gold, even though the domestic prices have become much higher than the world’s prices, because they fear high inflation and the bank deposit interest rates have become no more attractive,” he said.
“I have heard that enterprises deliberately do not sell gold at this moment to create an artificial supply shortage. However, I believe that it is the people’s thirst for gold which has created the big gap between the domestic and the world’s prices,” he added.
Biggest risks put on buyers’ shoulders
In order to ensure profits, gold companies all set up very large gaps between the purchase and the sale prices. SBJ’s sale price was higher by 1.2 million dong per tael than the purchase price, while the gap was 1.4 million dong per tael at Bao Tin Minh Chau. SJC set the gap at 700,000 dong per tael in both the big cities of Hanoi and HCM City. Meanwhile, Nguyen Thanh Truc, Director of AAA Company, said that the price gap applied by the company was only 400,000 dong.
In normal conditions, the gap between the purchase and the sale prices is very small. However, the gap has been widened these days as the market has been fluctuating heavily. According to Truc, the gap of 400,000 dong per tael is big enough to ensure profits for the company. Truc declined to give the answer to the question why other companies still set such large gaps.
vietnamnet, Tien phong
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