Just a temporary solution to reduce the price "fever"

Starting at 10:00 a.m. on April 22, the State Bank will conduct an auction of SJC gold bars with a total expected volume of 16,800 taels, equivalent to 6.3 tons of gold.

The bidding location is at the State Foreign Exchange Reserve Management Department (SBV), No. 25, Ly Thuong Kiet, Hoan Kiem, Hanoi . The bidding form is price bidding.

The total volume of gold bars expected to be auctioned is 16,800 taels; the volume of gold bars in one transaction lot is 100 taels; the type of gold bars sold is SJC gold bars produced by the State Bank.

According to information from the State Bank's leaders earlier, there are currently 15 credit institutions and businesses eligible to participate in the bidding (Illustration photo).

According to the State Bank of Vietnam, the unit has completed preparations for the gold bar auction, aiming to increase the gold supply to the market, intervene promptly, and immediately handle the situation of high difference in domestic and international gold bar prices, ensuring the gold market operates safely, stably, healthily, openly, transparently and effectively, in accordance with the direction of the Prime Minister .

Speaking to the press, economic expert Nguyen Tri Hieu said that the State Bank's plan to auction gold will certainly affect the supply and price of gold.

This expert commented that when the State Bank of Vietnam pushes a large amount of gold into the gold market, it will cool down the current "fever". Currently, the limited supply and high demand create instability in the gold market, pushing up the price of gold. Therefore, when the State Bank of Vietnam bids and puts a large amount of gold into circulation, it will certainly reduce the price of gold.

In addition, Mr. Nguyen Tri Hieu also said that the auction needs a large and regular amount of gold to maintain stability. The auction of gold through the State Bank has a positive impact, cooling the gold market. However, we do not know how much gold the State Bank will increase, perhaps these are just temporary moves. In the long term, the State Bank must consider amending and adjusting Decree 24.

Sharing the same view, Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Business Association, advisor to the World Gold Council in Vietnam, assessed that gold bidding is one of the solutions to create the fastest supply for SJC gold bars.

According to Mr. Khanh, to reduce the current gold price "fever", gold bar auctions are a necessary measure and a temporary solution. This is not the first time gold bar auctions have taken place. The State Bank of Vietnam used this solution in 2013, with dozens of sessions.

Mr. Khanh believes that the auction of gold bars will certainly reduce the gap between domestic and world gold prices. However, the extent of the reduction depends on the amount of gold that the State Bank will supply to the market.

Mr. Huynh Trung Khanh gave a situation, for example, the market needs 10,000 taels in a week, the State Bank must supply enough of that quantity to reduce the price difference. However, if only 2,000-3,000 taels can be supplied, the price will decrease somewhat but still be high. Through a few auctions, the market demand will be somewhat understood, from which the State will consider how much SJC gold to supply.

Before the news that the State Bank of Vietnam will organize a gold bar auction, gold expert Tran Duy Phuong said that the auction of 16,800 basic gold taels could be enough to "cool down" the gold bar market in the current period.

"I think that if 16,800 taels of gold is supplied to the market, it will quickly satisfy market demand. The difference in the price of SJC gold bars compared to the world gold price will certainly narrow," Mr. Phuong told VTC.

According to Mr. Phuong, the price offered by businesses is certainly higher than the reference price of the State Bank of Vietnam, which is 81.8 million VND/tael. Regarding the price, Mr. Phuong predicts that it will be around 82.3 - 82.5 million VND/tael.

According to this expert's analysis, the current gold price is trading at 82.7 - 83.3 million VND/tael, so the bidding price of 82.5 million VND is completely acceptable for businesses. Accordingly, businesses will certainly offer a reasonable price for bidding, of course, this price must be appropriate, otherwise if it is higher than the market price, they will not buy at the bidding.

Responding to Lao Dong newspaper, Dr. Le Xuan Nghia, member of the National Financial and Monetary Policy Advisory Council, assessed that the State Bank's gold bar auction only solves the supply-demand problem in the short term. Mr. Nghia suggested that the correct way to do it, which has both short-term and long-term value, is in line with international practices and is easy to control, is to allow qualified companies to import and export gold and control it by tax.

Director of the Institute of Informatics and Applied Economics Dinh The Hien said that gold bidding is only a temporary solution to increase supply to the market. "Of course, the winning bid price will be lower than the current market price, but I think it will not be significantly lower than the market price because the person offering the highest price will win the bid. Gold bidding is only a temporary solution to supplement the fastest gold supply to the market, not a fundamental solution to solve the unreasonable gold price difference," Mr. Hien emphasized.

Previously, at the press conference to inform about the first quarter banking performance of the State Bank on the morning of April 19, Mr. Dao Xuan Tuan - Director of the Foreign Exchange Management Department, State Bank said that the State Bank is ready to increase the supply of SJC gold bars according to the Prime Minister's direction.

Mr. Tuan informed that the State Bank has submitted to the Prime Minister a summary report on Decree 24 on gold market management, which has been consulted by ministries and branches. In addition to properly assessing the role of the decree over the past 10 years and considering it in the current context, the State Bank is considering removing the monopoly of SJC gold bars and adding many other gold bar brands.

On the afternoon of April 19, the State Bank announced for 15 businesses to review the conditions for participating in the gold auction with specific procedures. Accordingly, the auction will begin next Monday (April 22).

M.Vy (T/h)

Source: https://www.nguoiduatin.vn/dau-thau-vang-mieng-chi-la-giai-phap-tinh-the-ha-con-sot-gia-a659986.html