If you want to buy gold, you have to wait!

On May 10th, the domestic gold market witnessed another turbulent day. The price of SJC gold broke the 90 million VND/ounce mark as soon as gold shops opened for business.

The price of plain 24K gold rings also jumped to a record high of 76 million VND/ounce. People expect gold prices to continue rising, so they flocked to large gold businesses to buy, pushing up the prices of all types of gold.

If you want to buy gold, you have to wait!

By the end of the day, SJC gold bars closed at a sky-high price of 90.1 million VND/ounce for buying and 92.4 million VND/ounce for selling, an increase of nearly 3 million VND compared to the previous day and a 5 million VND increase in just the past two days.

The price of 24K gold rings and jewelry also surged to 74.85 million VND/ounce for buying and 76.55 million VND/ounce for selling, an increase of 1.35 million VND/ounce compared to the previous day.

Domestic gold prices surged amidst a dramatic increase in global prices – up more than $60/ounce (+1.8 million VND/ounce), reaching $2,371/ounce. However, with the rapid increase in SJC gold prices in recent days, the gap between domestic and international gold prices has widened to nearly 20 million VND/ounce.

People wait to buy and sell gold at SJC Company in Ho Chi Minh City on May 10. Photo: LAM GIANG

Amidst the dramatic surge in gold prices, people are still flocking to the headquarters of Saigon Jewelry Company (SJC) to buy SJC gold bars, while other stores and smaller gold shops are deserted due to the scarcity of this type of gold. Long queues are forming, with many people waiting for hours to buy just one or two ounces of gold. However, quite a few people are also selling their gold, fearing a price drop.

Due to a surge in demand, SJC Company has temporarily suspended transactions or limited each customer to purchasing only 1 tael of gold bars per day. For plain gold rings, each customer is also limited to a maximum of 3 taels per day instead of 5 taels as before.

In Hanoi , after two days of bustling trading, by the afternoon of May 10th, many large gold shops on Tran Nhan Tong Street in Cau Giay district had announced they had run out of SJC gold bars.

Customers wishing to buy gold bars must pay in advance according to the listed price at that time and receive the gold after 10-15 days. For example, Bao Tin Minh Chau gold shop on Cau Giay Street announced that they only accept purchases and have stopped selling. Customers entering the shop will be asked about their needs and will be immediately refused.

"Today, the store is out of gold and is only accepting purchases. If customers wish to buy gold jewelry, please queue up to wait for the transaction," the staff repeatedly announced whenever they saw a new customer.

Meanwhile, at the DOJI Gold and Jewelry Center in Cau Giay, staff said the store had run out of gold bars and plain gold rings. Customers who want to buy gold must pay in advance at the fixed price at the time of purchase and receive their gold between May 20th and 25th, meaning they will have to wait 10-15 days.

"Many of our customers have already paid and scheduled to pick up their gold later. Just finalize the price, make the payment, and then come to receive the gold on the agreed date. Once you've paid, the gold is yours, so you can rest assured. After May 25th, if you want to sell it, we will buy it back," a gold employee at DOJI explained to a customer.

According to reports, despite being told by staff that they were out of gold, a customer named Minh Tung still decided to place an order for 36 SJC gold bars and received a receipt. When asked if he was afraid of the risks involved in investing in gold at a time when prices were at record highs, Mr. Tung said: "Buying at such high prices also carries risks. If the price goes down, I have to accept it, but if it goes up, the profit will be huge."

Conversely, trading activity at small retail stores in Hanoi and Ho Chi Minh City was less bustling. Many stores were deserted on the day when buying prices reached record highs.

Can we just ignore the gold?

Given the dramatic surge in gold prices despite the State Bank of Vietnam's (SBV) efforts to stabilize the market through auctions in recent weeks, many experts and citizens are wondering whether the objectives of the gold auctions have not been achieved.

Financial expert Dr. Dinh The Hien commented that although the State Bank of Vietnam organized auctions, the supply from this channel was not significant, as only two auctions were successful, totaling approximately 6,800 ounces of gold.

"Gold auctions are essentially just a temporary solution to increase supply to the market, not a long-term solution. Domestic gold prices are being influenced by many factors that are causing a sharp increase, such as: the upward trend of world prices, the weakening of other investment channels (savings and real estate), so money is shifting to gold while the supply of gold bars is limited. These factors are causing the sharp increase in gold prices, not necessarily due to economic difficulties or inflationary pressure," said Dr. Hien.

Some have questioned why the State Bank of Vietnam (SBV) doesn't import gold to secure raw materials for processing SJC gold bars. Associate Professor Dr. Nguyen Huu Huan, a lecturer at the Ho Chi Minh City University of Economics, argues that importing gold would put pressure on the exchange rate, significantly impacting the macroeconomic situation, so the SBV must prioritize exchange rate stability over gold. In reality, gold prices have fluctuated sharply recently but have not affected the macroeconomic situation.

This view is supported by Dr. Ho Quoc Tuan, a lecturer at the University of Bristol (United Kingdom). He points out two issues that need to be discussed regarding the gold market at this time.

Firstly, international gold prices are projected to continue rising, potentially reaching $3,000 per ounce. If world gold prices reach this level, coupled with the current price difference between SJC gold and world gold of approximately 17 million VND per tael, SJC gold could reach 110 million VND per tael. The State Bank of Vietnam cannot intervene in this situation.

Secondly, narrow the price gap between SJC gold and world gold. To achieve this, it is possible to import raw gold, mint it into SJC gold bars, and sell it on the market, as many experts have suggested. However, importing large quantities of gold would consume foreign currency. Although businesses have proposed and committed not to use foreign exchange reserves to import gold, it would still affect the supply of foreign currency in the market.

But if gold imports are limited to avoid impacting the exchange rate, how can we ensure a narrowing of the gap with world gold prices, as some experts predict? According to Dr. Ho Quoc Tuan, this solution would also be half-hearted, like auctioning gold to increase supply but keeping the bidding price high.

"More importantly, although the gold market has fluctuated for many years, it has not affected the macroeconomic situation, so how to regulate it needs to take into account budgetary resources. Resources should only be used for regulation when there is an urgent need for monetary policy, especially given the limited foreign exchange reserves. If exchange rate tensions arise, it will significantly affect the stability of the macroeconomic economy," Dr. Tuan stated.

The root cause of the sharp increase in SJC gold prices.

The results of the past five bidding sessions show that the winning bid prices for SJC gold were very high - 81.3 million VND/ounce and 86.05 million VND/ounce. These prices were consistently about 15 million VND/ounce higher than the converted world gold price.

The winning bidders have reaped huge profits, as in just over three weeks since the successful auction on April 23rd, the price of SJC gold has increased by more than 10 million VND/ounce; and if calculated from the auction on May 8th, the increase is also more than 6.3 million VND/ounce. The goal of lowering domestic gold prices and narrowing the gap with world prices, as directed by the Prime Minister, has therefore not been achieved.

Some gold market experts believe that amidst the rush of people buying gold, businesses that won the SJC gold bar auctions naturally had to push prices up to make a profit. Meanwhile, people assumed that high bids would lead to high selling prices, meaning they expected SJC gold prices to rise further. Therefore, those with money rushed to buy, while those who already owned SJC gold were reluctant to sell.

Thus, the price of SJC gold continued to rise. The root of the market problem lies in the fact that, while purchasing power hadn't yet declined, the State Bank of Vietnam (SBV) auctioned SJC gold bars at prices significantly higher than world gold prices, widening the price gap even further.

According to experts, the immediate solution is for the State Bank of Vietnam to stop auctioning SJC gold bars and boldly switch to selling directly to businesses in small batches to gauge market reaction.

The reasonable price could be 5 million VND/ounce higher than the world price. At the same time, the State Bank of Vietnam stipulates that businesses can only sell to the public at a price no higher than 500,000 VND/ounce above the price they purchased from the State Bank. This would cause the price of SJC gold to fall sharply, narrowing the gap with the world price. Instead of rushing to buy, people would rush to sell their SJC gold bars out of fear of a further drop in market prices.

However, the State Bank of Vietnam (SBV) may face risks if world gold prices suddenly fall sharply, as selling gold would deplete national finances. Therefore, a precautionary measure the SBV needs to consider is inviting experts in international gold trading to assist in purchasing gold on account to compensate for the gold sold on the market, thus ensuring no losses when world gold prices fall.

Thy Tho

Source: https://nld.com.vn/gia-vang-sjc-tang-phi-ma-196240510215535126.htm