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Tightening control better than prohibiting trade of gold
Narrowing the trading activities on the bar gold free market, tightening the control of gold trading, and by establishing a national gold exchange, is the solution experts have suggested.
Tightening control or prohibiting trade?
Dr. Vu Dinh Anh, a well known economist in Vietnam, thinks that Vietnam should not prohibit mobilizing or lending in gold, because this will lead to a big waste of the resources in the society. The expert cited the statistics as saying “that 45 percent of money saved by Vietnamese people, especially the local residents in rural areas, is in gold. Only 24 percent of monies have been deposited in banks, while the remaining proportion has been injected in foreign currencies and real estate.”
Experts all agree that it is necessary to tighten the control over the bar gold market, but it is not advisable to prohibit bar gold trading.
Nguyen Thanh Truc, Chair and General Director of Agribank’s Jewellery Company also thinks that it is very difficult to prohibit the trading of the special kind of commodity, saying that “if the government tries to eliminate the market, another market, a black market, will take shape.”
Truc went on to say that “people have the demand for purchasing and hoarding gold and the demand can be described as natural as the demand for meals and drinks every day.” The expert also thinks that Vietnam should apply the measures to tighten the control over the gold market instead of prohibiting gold trade.
Representative of the Vietnam Banking Association Phi Dang Minh agrees that it is necessary to control the gold market more tightly instead of prohibiting trade. Minh said “though there are no official statistics about the volume of gold kept among people, but every one knows the volume is very big.” According to Saigon Jewellery Company SJC, from 1994 to April 2008, the company churned out 10 million taels of gold worth 10.539 billion dollars (In accordance to the 2008’s price). Meanwhile, according to the General Department of Customs and State Bank of Vietnam, from 1998 to September 2010, Vietnam imported 339.86 tons, and exported 268.86 tons.
According to Minh, “the demand for hoarding gold tends to increase, especially when the political uncertainties occurred in Lybia and earthquake and tsunami occurred in Japan.”
Regarding the volume of gold kept by Vietnamese people, Tran Trong Quoc Khanh, General Director of ACB-SJC, a goldsmith company, provided a figure which may surprise everyone. According to the World Gold Council, Vietnamese people now keep 500 tons of gold in their coffers, which has the value of 22 billion dollars.
Khanh said that in 2009 and 2010, the excess of exports over imports was 140 tons. If counting on the 90 tons of gold mobilized from the public and institutions, the volume would be 230 tons. As such, 270 tons of gold is still lying among people.
Another source that the volume of gold kept among people is 1000 tons, not 500 tons. The source also said that a big volume of gold was collected a long time ago, when the price was just 200-300 dollars per ounce.
National gold exchange, why not?
Setting up a national gold exchange has been praised as a good idea to control the gold market, because it will allow control of the gold market, while allow using the huge capital from gold for investment and development. This proves to be an inevitable step of the finance market.
Representatives from the Bank for Development and Investment of Vietnam (BIDV) said that “at the exchange, the supply and demand will decide the prices.” As such, the exchange will allow the stopping of speculation, which will make the gold market healthier.
Khanh from ACB-SJC also thinks that establishing a national gold exchange is the optimal solution for now. Specifically, he has suggested: to establish a national gold examination center, set up specifications for bar gold products, and reckon up the volume of gold hoarded by people.
Tuyet Ngan
vietnamnet
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