Many solutions to regulate the gold market

Investors are "eagerly" waiting for Decree 24/2012/ND-CP of the Government to be amended soon to stabilize the gold market. According to many economic experts, to narrow the gap between domestic and international gold prices, first of all, it is necessary to eliminate the monopoly of SJC gold bars.

Many opinions propose granting licenses to produce gold bars to businesses that meet the conditions.

Limited supply makes management difficult

After 12 years of applying Decree 24/2012/ND-CP dated April 3, 2012 on gold trading management, although affected by world gold prices, SJC gold bar prices fluctuated complicatedly at many times, but the sales of SJC gold bars were relatively balanced, decreasing, reflecting the downward trend of demand for gold bars in the economy. Thus, Decree 24 has completed its "mission": Controlling risks for the banking system, stabilizing the gold market, and limiting the "goldenization" situation.

"However, from 2022 to now, the international gold price has fluctuated strongly, the domestic SJC gold bar price has increased at a faster rate than the international gold price. The difference between domestic and international gold prices has continuously widened, over 10 million VND/tael, at times 18 million VND/tael," said Deputy Governor of the State Bank of Vietnam (SBV), Mr. Pham Thanh Ha.

The existence of a large difference between the price of SJC gold bars compared to other types of gold bars, 99.99% fine art jewelry gold and international gold prices, according to the Ministry of Public Security , is the reason leading to gold smuggling into Vietnam.

Deputy Governor of the State Bank of Vietnam Pham Thanh Ha said: Although there is a solution of "State monopoly on gold bar production" to strictly control the supply, from 2014 to now, the State Bank of Vietnam has not organized auctions to sell gold bars, increasing supply in the market. Therefore, the supply of SJC gold bars in the market is still limited, which is one of the reasons why the difference between domestic and international gold prices remains high.

Since the Lunar New Year, the domestic gold market has continuously witnessed "waves" in prices. In particular, the scarcity of SJC gold bars and 24K gold rings has caused gold prices to rise to unprecedented highs, but also plummet, causing investors to suffer.

"Investing in stocks is not easy for amateurs, while the real estate market has been sluggish for a long time and deposit interest rates are low, so people tend to buy gold," said economic expert Dinh Trong Thinh.

The price of SJC gold and plain rings has been increasing continuously for many months, causing gold shops to run out of gold rings to sell. Some shops even have to write a note to let buyers wait 1 month before they can pick up the gold.

Gold trading expert Dinh Nho Bang analyzed: Since Decree 24, the State Bank has only granted licenses to import raw gold to businesses that have been granted certificates of eligibility to produce gold jewelry and fine arts. Meanwhile, the fine arts and jewelry industry in Vietnam needs about 20 tons of raw gold each year. "The prolonged price difference will make it more difficult to manage the gold market, especially as gold smuggling is at high risk of increasing," Mr. Dinh Nho Bang worried.

Along with the gold price, the USD price is also on an upward trend, which according to many economic experts, is due to the prolonged negative interest rate gap between VND and USD, creating pressure to withdraw capital, the import of production materials is increasing sharply in the first months of the year, fluctuations in gold prices and the gap between domestic and international gold prices make the exchange rate on the free market very unpredictable.

The difference between SJC buying and selling prices is also very large, pushing risks to gold buyers. The buying price is adjusted more strongly than the selling price, leading to a buying - selling difference of up to 2 - 5.5 million VND/tael (at the end of 2023). Normally, the buying - selling price of gold bars only differs from 400,000 VND to 1 million VND/tael.

"SJC is identified as a national gold brand, so even though gold from other brands has similar quality, people still choose SJC," said Prof. Dr. Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee.

According to Mr. Hoang Van Cuong, Decree 24 needs to be amended in a way that does not necessarily require the State to have a monopoly on a gold brand. Along with that, it is possible to let many businesses participate in the process of producing gold bars.

"When the supply is free, people will have easier access to accumulated gold, and there will no longer be a shortage," Mr. Hoang Van Cuong analyzed.

There should be a gold exchange

According to lawyer Tran Minh Hai, Director of Basico Law Firm: "For a long time, every time they needed to import gold to meet domestic demand, businesses had to buy foreign currency from the State Bank and this affected foreign exchange reserves and exchange rates."

Besides, most people buy gold to save. Therefore, experts believe that it is time to establish a gold trading floor to help this commodity circulate smoothly, reducing the situation of buying it to "store in the closet".

"In case of amending Decree 24, the State Bank can consider establishing a gold trading floor. In fact, gold trading floors already exist even though there are no legal regulations regulating this activity. Vietnam is lacking regulations to create an official playground for investors, solving the problem of buying gold to store in safes, causing gold prices to rise," the Director of Basico Law Firm suggested.

To manage the gold market, in the report No. 28/TTr-NHNN dated March 20, 2024 sent to the Prime Minister, the State Bank proposed to remove the State monopoly mechanism on gold bar production and grant licenses to produce gold bars to a number of qualified enterprises.

Deputy Governor of the State Bank of Vietnam Pham Thanh Ha said: The State Bank of Vietnam will issue a gold bar production limit in each period in accordance with monetary policy goals and the stability of the macro economy.

This plan shares the view of the Ministry of Public Security, which is to eliminate the monopoly on gold bar production and import of raw gold to produce gold bars in the direction of "not liberalizing the gold market"; selecting qualified enterprises to carry out import-export, production and trading of gold under the management of the State.

The above solution will increase the supply of gold bars in the market, solving the problem of price difference between SJC gold bars and other types of gold and some 99.99% gold jewelry products.

"The State Bank will proactively regulate the gold market by granting gold bar production quotas to businesses based on monetary policy targets in each period. The State Bank will not have to use the State's foreign exchange reserves to import raw gold to intervene in the market, businesses will balance their own foreign currency sources for import," said Deputy Governor Pham Thanh Ha.

Economist - Associate Professor, Dr. Ngo Tri Long:

Decree 24 should be amended in the direction of: Returning the production and trading of gold bars to enterprises. The State Bank does not hold the sole right to produce gold bars. Instead, the State Bank can consider allowing some commercial banks (CBs) or enterprises to produce gold bars to supply the market. This is in line with international practice and will help reduce the difference in domestic and international gold bar prices.

In addition, it is necessary to create a distribution system in the market that allows people in all regions to benefit and have favorable trading conditions. Anti-goldenization cannot be achieved by administrative solutions, but must shift from trading gold bars to trading other gold products (gold certificates, gold accounts, etc.) on a centralized trading center.

Dr. Can Van Luc, member of the National Monetary and Financial Policy Advisory Council:

Some issues that need to be implemented soon are allowing an increase in the supply of gold to meet people's needs. In addition, allowing some qualified enterprises to meet the conditions to import gold; eliminating the exclusive national brand SJC. Strengthening coordination between the State Bank and ministries and branches to inspect and supervise the gold market in a public and transparent manner. Finally, Vietnam needs to strengthen international cooperation, fight smuggling, and ensure market supply and demand to ensure connectivity between domestic and world gold prices. This is very important, contributing to preventing "goldenization" in the economy.

Referring to international experience, the State only manages gold bars, while gold jewelry and fine art are regulated by the market, considering them as ordinary goods like other goods. Particularly with gold bars, it is necessary to assign appropriate roles in management and supervision. If gold bars are related to foreign currency, foreign exchange management, and supplementing the national foreign exchange reserves, the State Bank will take the lead; if it is related to the import and export of gold bars, the role of the customs agency is required.

According to Tin Tuc Newspaper

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