However, one of the consequences of the continuous sharp increase in the price of this precious metal is an increase in gold smuggling.
Customers transact at Bao Tin Minh Chau Company Limited. Photo: Do Tam
Continuously setting new records
After a period of sharp increase, on March 13, the price of SJC gold bars reversed, falling by nearly 2 million VND/tael, down to 80.7 million VND/tael. Not only did the price of gold bars plummet, but the price of gold rings also "fell" by 1.4-2.4 million VND/tael. Therefore, those who bought gold when the price was high suffered a loss of more than 4 million VND/tael. The domestic gold price decreased due to the influence of the international market and many people took advantage of the situation to sell to make a profit.
After a day of sharp decline, the price of precious metals quickly reversed, increasing by around 1 million VND/tael, to 81.7 million VND/tael on March 14. On March 15, the gold price initially decreased by 100,000-250,000 VND/tael in the selling direction, but by the afternoon of the same day, it reversed and increased, 100,000-400,000 VND/tael higher than the end of the previous day, with the common selling price at 81.6-81.9 million VND/tael.
Previously, the price of SJC gold bars continuously increased and rushed to record levels. On March 2, the price of gold increased by more than 1 million VND/tael, reaching a record level of 81 million VND/tael. Then the price of gold reached a new peak of 82.2 million VND and reached a historical high of 82.5 million VND/tael on March 12. Thus, the price of gold has increased by more than 8 million VND/tael compared to the end of 2023.
Financial expert Nguyen Tri Hieu said that the continuous increase in domestic gold prices in recent times is not only due to the influence of the international market but also because of increased domestic demand while supply is limited. In that context, a slight increase in demand can push up gold prices. While in recent days, people have bought a lot of gold, businesses sometimes have to make appointments for customers to pick up later. The sharp increase in gold prices and their high levels first of all affect people's psychology. This is shown by the fact that when they see the price increase, many people are afraid that the price will increase even more and rush to buy, thereby pushing domestic gold prices even "hotter". In addition, the sharp increase in gold prices, with a large difference from international prices (commonly 16-17 million VND/tael), has increased the situation of gold smuggling.
Mr. Nguyen Tri Hieu also noted that the sharp increase in gold prices is a sign of rising inflation for many people. At that time, some economic sectors will "follow the trend". Not to mention, when the gold price fluctuates sharply, people rush to buy, even withdraw savings to switch to this investment channel, making it difficult for banks to mobilize capital from people. Currently, there is still a lot of gold in the people, about 400 tons of gold. People do not invest in other channels for production and business but increase gold purchases, which means that money is lying idle in the people, which is not beneficial for the economy .
Meanwhile, economic and financial expert Dinh Trong Thinh said that gold is now only considered an investment channel, not a means of payment as before. Commercial banks also no longer mobilize and lend gold, so the strong fluctuations in gold prices have an insignificant impact on the macro economy.
However, the sharp increase in gold prices, the large difference with the world price, will increase gold smuggling, thereby affecting the USD price in the free market. In fact, on March 11, the USD price in the free market increased by 150 VND in the selling direction, bringing the official selling price to 25,700 VND - the highest level ever.
Prevent gold smuggling
Sharing the same view, Vice President of the Vietnam Gold Business Association, advisor to the World Gold Council in Vietnam Huynh Trung Khanh said that the biggest consequence of the phenomenon of high gold prices and large differences with world prices is the increase in gold smuggling. Smuggled gold is "smuggled" into small gold shops, people can buy poor quality gold. Along with that, gold smuggling causes loss of state budget revenue. In fact, in recent years, the authorities have discovered many cases of gold smuggling across the border and successfully fought and destroyed many very large-scale networks.
According to forecasts by some experts, the world gold price from now until the end of the year tends to continue to increase, possibly reaching 2,200-2,300 USD/ounce, because the US Federal Reserve may cut interest rates. In addition, the geopolitical crisis continues, investors will buy more gold as a "safe haven"... Domestic gold prices will increase accordingly. Thus, domestic gold prices may repeat the strong increase as recently and the gap with world gold prices will remain at a wide level.
In the current context, expert Nguyen Tri Hieu said that intervention in the gold market is necessary through the move to adjust Decree No. 24/2012/ND-CP, eliminating the monopoly of SJC gold bars to create competition in the market and the State Bank handing over the role of gold import to reputable businesses. "As for administrative intervention, it is not necessary, because at this time the increase in gold prices has not had a significant impact on the macro economy," Mr. Nguyen Tri Hieu commented.
According to Mr. Huynh Trung Khanh, in January 2024, the Vietnam Gold Business Association proposed that before issuing a new decree replacing Decree No. 24/2012/ND-CP, the State Bank should consider granting licenses to import raw gold to businesses to help combat gold smuggling. On the other hand, the amount of gold requested for import is not too much, so it will not affect the exchange rate or foreign exchange reserves...
Faced with continuous fluctuations in gold prices, the State Bank has recently advised people to be cautious in gold transactions, especially noting that domestic gold bar prices often increase rapidly and are higher than world gold prices.
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