The record big gap between the domestic and international gold prices has prompted speculators to import gold to sell domestically for profit.
On April 20, the domestic gold market was boisterous, even though some big gold trade companies did not open on the weekend. On that day, SJC brand gold was quoted at VND41.5- 42 million per tael at the shops in HCM City. The gold price was hovering around $1,406 per ounce, or VND35.5 million per tael. As such, the domestic gold price was VND6.5 million per tael higher than the international price.
Gold demand on the rise
The domestic market has been seething on the price decreases. Gold trade companies all have confirmed that people rush to buy gold when they see the prices decreasing and becoming more reasonable. The demand is so high that people have to queue up for buying gold in front of some shops. The demand has been very high for both bullion and jewelry gold.
In Hanoi, Rong Thang Long and SJC brand gold has been selling at VND40 million per tael.
Nguyen Thi Le in district 7 in HCM City said she bought some jewelry items yesterday when she saw the prices decrease, though her wedding would only be in November.
Tran Thi Van in Bien Hoa City also said she has bought some gold rings for the daughter who is going to get married in some months.
According to the owner of a big gold shop in Bien Hoa City, as the State Bank has tightened the control over bullion gold trade, people now tend to buy 999.9 percent gold rings.
Meanwhile, an executive of a gold trade company in HCM City said retail gold shops have placed big orders. “They said the purchasing power is very high and they accepted to pay high prices,” he said.
Gold demand increase pushes dollar demand up
The bustling gold market has stimulated the demand in the black foreign currency market.
Some gold shops late last week offered to buy dollars at VND21,350 per dollar and sell at VND21,450, which represented a VND450 per dollar increase over the week before.
If referring to the black market dong/dollar exchange rate when calculating the gold price, the international price now stands at VND36.3 million, or VND5.9 million per tael lower than the domestic price.
Observers believe that the overly big gap between the domestic and international prices has prompted dealers to import gold to sell domestically for profit. With such a big price gap, smugglers can make a fat profit of several million dong per tael sold.
An official in HCM City has admitted that the state management agencies have noted the sharp increase in the illegal imports these days, but it’s very difficult for the management agencies to stop the smuggling.
Some days ago, an agency in HCM City discovered a case of carrying 7 kilos of gold across the border. However, only two kilos were found as bullion gold, while the other five kilos were given back to the carriers, because the gold was cut into pieces or fatten with no sign about the origin.
Nguyen Van Dung, Chair of the HCM city Fine Arts and Goldsmith Association, has quoted a report of the International Monetary Fund as saying that the amount of gold consumed in Vietnam in 2012 increased by 77 tons, even though the State Bank did not grant quotas for importing gold.