Want to buy gold must wait!

On May 10, the domestic gold market witnessed another "stormy" day. The price of SJC gold broke the peak of 90 million VND/tael as soon as gold shops opened for business.

The price of 24K plain gold rings also jumped to a record high of 76 million VND/tael. People expected the price of gold to continue to increase, so they rushed to large gold companies to buy, pushing up the price of all types of gold.

Want to buy gold must wait!

By the end of the day, SJC gold bars closed at a sky-high price - 90.1 million VND/tael for buying, 92.4 million VND/tael for selling, an increase of nearly 3 million VND compared to the previous day and an increase of 5 million VND in just the past 2 days.

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

Domestic gold prices jumped in the context of world prices also skyrocketing - more than 60 USD/ounce (+1.8 million VND/tael), up to 2,371 USD/ounce. However, with the increase in SJC gold prices in recent days, the gap between domestic and world gold prices has widened to nearly 20 million VND/tael.

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

In the context of the shocking increase in gold prices, people still flocked to the headquarters of Saigon Jewelry Company (SJC) to buy SJC gold bars while other stores as well as small gold shops were deserted because of the scarcity of this type of gold. Queuing appeared as many people had to wait for hours to buy 1-2 taels of gold. However, there were also quite a few people selling gold because they were worried that the price would drop again.

Due to the sudden increase in demand, at some points SJC Company temporarily suspended transactions or limited each customer to only buying 1 tael of gold bars/day. If buying plain gold rings, each customer can only buy a maximum of 3 taels/day instead of 5 taels as before.

In Hanoi , after 2 days of bustling trading, by the afternoon of May 10, many large stores on Tran Nhan Tong gold street, Cau Giay announced that they had run out of SJC gold bars.

Customers who want to buy gold bars must pay in advance according to the listed price at that time and receive the gold after 10 - 15 days. As Bao Tin Minh Chau gold shop on Cau Giay street announced, it only accepts purchases and stops selling. When customers come to make a transaction, they will be asked about their needs and immediately refused.

"Today, the store is out of gold, only accepting purchases. If you want to buy gold jewelry, please wait in line for a transaction" - the staff continuously announced when seeing new customers.

Meanwhile, at DOJI Jewelry Center 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 according to the price fixed at the time of purchase and receive the gold from May 20 to 25, meaning they will have to wait 10 to 15 days.

"Many of our customers have paid and scheduled to pick up the gold later. We just need to finalize the price, pay, then come to pick up the gold on the scheduled date. We have paid, the gold is ours so we can rest assured. After May 25, if you want to sell, we will buy it back" - a gold staff at DOJI explained to the customer.

According to the record, despite being informed by the staff that there was no gold left, a customer named Minh Tung still decided to pay to buy 36 taels of SJC gold bars and received an appointment letter. When asked if he was afraid of risks when deciding to invest in gold at a time when prices were at a record high, Mr. Tung said: "Buying at such a high price also has risks. If the price goes down, you have to bear it, but if it goes up, you will make a big profit."

In contrast, trading 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.

"Ignore" gold, okay?

Faced with the shocking increase in gold prices despite the State Bank's (SBV) efforts to organize auctions to stabilize the market in recent weeks, many experts and people are wondering whether the gold auction target has not been achieved?

Financial expert - Dr. Dinh The Hien commented that the State Bank organized the auction but the supply from this channel was not much, because in reality there were only 2 successful auctions with about 6,800 taels of gold.

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

Some opinions raise the question of why the State Bank does not import gold to have a source of raw gold to process SJC gold bars? Associate Professor, Dr. Nguyen Huu Huan, lecturer at the University of Economics, Ho Chi Minh City, said that importing gold will cause pressure on the exchange rate, greatly affecting the macro economy, so the State Bank must prioritize stabilizing the exchange rate over gold. In fact, in recent times, gold prices have fluctuated strongly but have not affected the macro economy.

This view is supported by Dr. Ho Quoc Tuan, lecturer at Bristol University (UK). He pointed out two issues that need to be discussed about the gold market at this time.

Firstly, the international gold price is forecast to continue to increase, possibly reaching 3,000 USD/ounce. If the world gold price increases to this level, combined with the difference between SJC gold price and the world price of about 17 million VND/tael, SJC gold could reach 110 million VND/tael. The State Bank cannot intervene in this.

Second, narrow the price gap between SJC gold and the world. To do so, we can import raw gold, stamp it into SJC gold bars and sell it on the market as many experts have suggested. However, importing a lot of gold will waste foreign currency. Although businesses have proposed and committed not to use foreign exchange reserves to import gold, it still affects the supply of foreign currency in the market.

If we only allow limited gold imports so as not to affect the exchange rate, how can we ensure that the gap with world gold prices is narrowed as some experts predict? According to Dr. Ho Quoc Tuan, this solution would be as half-hearted as bidding for gold to increase supply but keep the bidding price high.

"More importantly, the gold market has been fluctuating for many years but has not affected the macro economy, so how to regulate it needs to consider the budget's resources. Only use resources to regulate when there is an urgent need for monetary policy, especially in conditions where foreign exchange reserves are limited. If the exchange rate is tense, it will greatly affect the stability of the macro economy" - Dr. Tuan expressed his opinion.

The root cause of the hot increase in SJC gold price

The results of the last 5 auctions show that the winning price of SJC gold is very high - 81.3 million VND/tael and 86.05 million VND/tael. These prices are always higher than the converted world gold price by about 15 million VND/tael.

The winning enterprises have earned huge profits as in just over 3 weeks since the successful bidding session on April 23, the price of SJC gold has increased by more than 10 million VND/tael; and if calculated from the session on May 8, the increase is also more than 6.3 million VND/tael. The goal of reducing domestic gold prices and narrowing the gap with world prices as directed by the Prime Minister has not yet come true.

Some gold market experts say that in the context of people jostling to buy gold, businesses that have won the bid for SJC gold bars must naturally raise the price to make a profit. People think that high bids will mean high selling prices, meaning they expect the price of SJC gold to increase further, so those with money rush to buy, while those with SJC gold do not want to sell.

Thus, the price of SJC gold continuously increased. Thus, the root of the market lies in the fact that when purchasing power has not yet decreased, SJC gold bars are auctioned by the State Bank of Vietnam (SBV) at a price much higher than the world gold price, causing the gap to grow larger and larger.

According to experts, the immediate solution is that the State Bank can stop bidding for SJC gold bars and boldly switch to selling directly to businesses in batches with small quantities to test market reactions.

The reasonable price can be 5 million VND/tael higher than the world price. At the same time, the State Bank of Vietnam stipulates that businesses can only sell to people at a price no higher than 500,000 VND/tael compared to the price purchased from the State Bank of Vietnam. At that time, the price of SJC gold will decrease sharply, narrowing the gap with the world price. Instead of rushing to buy, people will rush to sell SJC gold bars because they are worried about the market price going down.

However, the State Bank may face risks if the world gold price suddenly drops sharply, the sale of gold will "evaporate" the national financial resources. Therefore, the preventive measure that the State Bank needs to consider is to invite people who are knowledgeable about gold trading in the international market to support the purchase of gold accounts to compensate for the amount of gold sold on the market, thus ensuring that there will be no losses when the world gold price goes down.

Thy Tho

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