Gold buying rush continues in Vietnam

People in Vietnam are still lining up to buy gold at banks and jewelry stores despite the government's efforts to stabilize the gold market out of their fear for economic instability and inflation.

People are waiting to buy gold in front of SJC Co. in HCMC on June 10 (Photo: SGGP)

Six days have passed since the State Bank of Vietnam (SBV) directly sold SJC gold bars to Agribank, BIDV, Vietcombank, Vietinbank and Saigon Jewelry JSC. (SJC Co.) so that they can then sell to the public, lines after lines of people are still spotted in front of these banks and company, waiting to buy gold.

At 7:00 a.m. on June 10 in front of SJC Co. (at 418-420 Nguyen Thi Minh Khai Street in District 3 of HCMC), a long line of people was standing patiently with their transaction order number at hand. The police and security guards were around for safety reasons. At 10:00 a.m., all transactions stopped due to overloading. However, many still stayed to take another number for the afternoon session just to buy 1 tael a day.

A similar picture can be seen at the branches of BIDV, Agribank (District 1, HCMC). Some banks only allow gold buying in the afternoon as they have to purchase gold from the Vietnam State Bank and transport it to their inventory in the morning. They also issue a purchase limit of 2 tales per person.

In Hanoi yesterday, the situation of long lines waiting to buy gold in front of Agribank, BIDV, Vietcombank, Vietinbank and SJC Co. is the same as that in HCMC.

PNJ’s buying and selling prices of SJC gold bars yesterday afternoon were at VND74.98 million (US$2,950) and VND76,98 million ($3,027) per tael. The buying and selling prices of gold rings continuously dropped to VND73.38 million ($2,886) and VND74.2,937) per tael.

To buy gold at banks, people have to display their citizen ID card or equivalent, along with providing information about their job, company position, permanent address. They can choose to pay either by cash or via bank transfer.

Seeing the recent complex fluctuations in the gold market, the Government and the Prime Minister have issued a series of directives to stabilize the gold market. However, it is necessary to adopt a truly fundamental solution to gold market management.

People are buying gold at a bank branch in HCMC (Photo: SGGP)

Pham Van Hoa, a member of the National Assembly's Legal Committee, the SBV's sale of gold through the system of four state-owned commercial banks and SJC Co. is merely a situational solution to calm the market. This is not at all considered a fundamental, long-term solution to stabilize the market.

Gold is not a commodity in the price stabilization list. When gold is cheap, people buy even more, which is not good for the economy. Gold reserves, in addition to being an asset, also harbor the risk of gold speculation.

Facing the instable gold prices lately, the Government already directed an urgent adjustment of Decree 24 about managing gold trading activities, yet this essential action has not been done. The government needs to resolutely prevent gold smuggling; and inspect businesses that are not allowed to sell gold bars but still sell them, as they may be selling smuggled gold.

Acknowledging the complexities of gold market management, Tran Hoang Ngan, an economic expert and former Director of the HCMC Institute for Development Studies, commented that the government and the SBV have not carried out appropriate interventions.

He was confident in the SBV's capacity to release gold reserves to stabilize domestic gold prices and reduce the gap with international gold prices, but emphasized transparency in gold transactions via invoices and supporting documents to protect consumers.

Facilitating the import of raw gold by businesses is also crucial. While the SBV should maintain its exclusive control over SJC gold for a period to safeguard the achievements of anti-dollarization efforts over the past decade and contribute to macroeconomic stability, the ultimate goal is not to lower gold prices but to narrow the domestic-international gold price gap.

He further highlighted the importance of harmonizing and rationalizing interest rate policies to encourage public trust in depositing funds within the banking system. This entails ensuring attractive deposit rates for savers while considering lending rates as well.

Finally, he proposed that the State Treasury, the Ministry of Finance, and local authorities should increase bond issuance to mobilize public funds for investment and development. A stable and well-developed financial market is also essential to provide individuals with more investment opportunities.

The SBV and economic experts urge the public to exercise extreme caution when engaging in gold buying and selling activities when there are unpredictable fluctuations in both global and domestic gold markets.

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