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Central bank considers setting up gold fund
The State Bank of Vietnam is considering setting up a gold fund with Saigon Jewelry Comapny (SJC), the country’s largest gold trader, and commercial banks, to tame the soaring domestic gold prices.
Accordingly, when domestic gold price rises unexpectedly, the central bank will narrow the gap between local and global prices by increasing supply to SJC’s gold stock and the banks’ gold deposit.
The banks will also be allowed to open gold trading accounts on international floors to balance their stocks.
When domestic price drops, SJC and the banks will buy gold.
Experts said the gold fund mobilized from SJC and commercial banks should be about 20 tons, or 530,000 taels.
They said to carry out this plan, the central bank must allow banks to sell part of their gold deposits and to open gold trading accounts on international floors, of which it banned last July.
Some insiders also questioned how big the gap between domestic and global prices should be to be considered big enough to require the central bank’s intervention.
The central bank said a gap of VND400,000 a tael would be reasonable as it shows signs of speculation.
A banking expert said the fund of 20 tons of gold would be worth around $1.2 billion, a sum no speculators could ever afford to manipulate the market.
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