Persistently fight against the gold-ization of the economy

At the question-and-answer session for the banking sector on November 11, gold market management and credit growth were the two issues that most delegates were interested in.

Why do "Big 4" only sell, not buy gold?

People buy gold jewelry - Photo: TU TRUNG

Talking to Tuoi Tre, Mr. Ngo Tri Long - economic expert - commented that the State Bank's assignment to four state-owned commercial banks - the Big 4 group including Agribank , BIDV, Vietcombank, VietinBank and SJC Company to directly sell SJC gold bars to people is to stabilize gold prices. The purpose of this solution is to increase supply to the market and bring the difference in domestic gold prices closer to world gold prices.

"As for why these four banks do not buy back gold, in my opinion, the underlying nature of this solution is to limit people from buying and selling gold. If the policy makes it too easy to buy and sell gold, it is not advisable in the context of the economy needing to mobilize maximum resources from people and businesses for production, business activities, and infrastructure investment" - Mr. Long commented.

Meanwhile, the director of a gold trading company in Ho Chi Minh City said there are many reasons why the Big 4 only sell gold and not buy it. In fact, many banks do not have gold trading business.

"When the State Bank gives gold to Big 4 banks to sell to people, the banks "by default" have a profit margin to cover operating costs (in the past it was 1 million VND/tael). But if the banks buy gold, it's a different story. Then they have to "reluctantly" trade in gold, then they have to balance the situation (balance between buying and selling), how to handle it to avoid losses and make profits when prices fluctuate continuously," said the director of a gold business.

Besides, according to the director of this gold business, another reason is that counterfeit gold is very sophisticated. If you only look with the naked eye, it will be very difficult to distinguish between real gold and fake gold because the design and weight are almost the same, both are 9999 gold. Even the differences that could previously help identify fake gold are gradually being surpassed.

Even professional inspectors are still "slipping through". Therefore, if many banks that do not have gold trading experience now participate in buying gold bars, it will be easy for fake gold to slip through, thereby allowing bad guys to "legalize" floating raw gold to gain huge profits. It should be mentioned that there is sometimes a difference of 5-6 million VND/tael between raw gold and SJC gold.

Gold floor and gold capital mobilization

According to experts, Vietnam has applied both of these forms but has not been successful, leaving many consequences that must be resolved later.

Gold trading floor must be closed because many people... go bankrupt

According to long-time experts in the gold field, the issue of setting up a gold exchange should not be raised because of many risks for investors because the gold price fluctuates according to the world gold price and investors do not have enough experience as well as risk prevention tools like the world's professional gold exchanges.

Not to mention past experience shows that the activities of gold exchanges affect investors, banks and the economy.

In fact, Vietnam used to have a bustling gold trading floor. But at the end of 2009, after many months of operation, which left many major consequences for investors such as bankruptcy, losses, and exchange rate instability, the Prime Minister at that time ordered the closure of the gold trading floors.

"Setting up a gold exchange is not difficult, but managing and operating a gold exchange is a problem. In the past, gold exchanges were a very painful story and the State Bank had to work very hard to eliminate gold exchanges. Not to mention that the domestic gold market is not connected to the world. We cannot play our own game," said this expert.

Should we mobilize gold?

The banking system also used to mobilize gold but eventually had to stop mobilizing because most gold borrowers suffered losses due to the continuous increase in gold prices.

At that time, banks mobilized gold, partly lent it in gold, and many borrowers encountered difficulties due to the continuous increase in gold prices. Other banks also "went through the roof" because they had sold gold to get VND for loans, and when they needed gold to pay people, the price was sky-high! At that time, the State Bank had to use foreign currency to import gold to sell to banks to mint SJC gold to pay people, putting great pressure on the exchange rate.

It took many months and a lot of foreign currency to stop gold mobilization in 2013. For more than a decade, the most effective form of gold capital mobilization was to gradually reduce the amount of money poured into gold, instead of letting people use money to buy gold and then have to find a way to mobilize that gold again.

Source: https://tuoitre.vn/kien-tri-chong-vang-hoa-nen-kinh-te-20241112081441136.htm