Resetting the gold market

Many economic experts believe it is time to re-establish "order" in the gold market.

In recent days, news that four gold trading companies and two banks were fined for violating regulations in gold trading has attracted significant public attention. However, it wasn't until the State Bank of Vietnam (SBV) announced the inspection findings that people were "shocked" by a gold market that many had long questioned: "Is there an invisible hand manipulating the market during these 'frenzied' gold price fluctuations?"

Transparency to prevent manipulation

The State Bank of Vietnam's inspection report revealed numerous serious violations in the gold trading activities of major companies such as Saigon Jewelry (SJC), Phu Nhuan Jewelry (PNJ), DOJI Jewelry, Bao Tin Minh Chau, and two commercial banks, TPBank and Eximbank. A prime example is the violation of anti-money laundering regulations by failing to report large-value gold trading transactions.

Gold transactions at gold shops in Ho Chi Minh City. Photo: HOANG TRIEU

Mr. Tran Huu Dang, General Director of AJC Gold, Silver and Gemstone Joint Stock Company ( Hanoi ), stated that according to regulations, transactions involving the purchase of gold bars with cash exceeding 400 million VND must be reported to the State Bank of Vietnam. However, some businesses still conduct transactions even when customers do not provide complete personal information, leading to violations of the law.

According to a gold trader in Ho Chi Minh City, the State Bank of Vietnam currently requires gold trading businesses to report daily on the quantity of gold bought and sold, even when no transactions occur, and to collect complete personal information of customers for storage and verification when necessary. However, due to profit motives or competitive pressure, some businesses may ignore the information verification process, or even intentionally facilitate opaque trading practices.

Specifically, although there is no basis to determine whether the price increase during the period from October 2, 2023 to April 15, 2024 was unreasonable, at SJC, the buying and selling prices of gold were decided by an individual, the general director, without specific criteria or justification, while this is a company with a market-setting role. "This leads to risks in price determination, affecting the operations of SJC Company as well as the gold market, given SJC's relatively large market share," the conclusion of the State Bank of Vietnam's inspection stated.

Another hotspot is that some banks allow customers to trade gold but do not actually exchange gold or cash in order to profit from the difference. This is a form of speculation, a serious violation of current regulations, posing significant tax risks and disrupting market order.

It needs to be clear and fair.

Given this situation, many economic experts believe it is time to re-establish the "rules of the game" in the gold market. According to Dr. Dinh The Hien, if General Secretary To Lam's decisive directives on reforming gold management policies are thoroughly implemented, the market will gradually stabilize and develop in a healthy direction.

According to him, the first step is to eliminate the state monopoly over the SJC gold bar brand in a controlled manner. At the same time, licenses should be granted to businesses that meet the necessary technical and financial requirements to produce gold bars. Expanding the right to import raw gold under state control will also contribute to increasing supply, reducing the price difference between domestic and international gold, and thus limiting gold smuggling across borders.

"Controlling the gold market cannot stop at inspection and penalties. Authorities can absolutely calculate and estimate the amount of gold held by the public from 2014 to 2024. If, for many years, no gold import licenses have been issued, yet sales remain high, then we need to ask: how much of that is smuggled gold?" - Dr. Hien raised the issue.

He argued that if the import of gold for the production of gold bars and rings were officially and legally permitted, the state would not only collect taxes but also avoid the loss of foreign currency. At the same time, people would have access to gold at a reasonable price, instead of having to buy it at tens of millions of dong higher than the world price per ounce as is currently the case.

Associate Professor Ngo Tri Long also agreed that the gold market needs a comprehensive reform. He argued that gold is a very sensitive sector, easily susceptible to speculation and manipulation, especially when the macroeconomic situation shows signs of instability. The State should not directly intervene in prices or monopolize production and distribution, but should create a transparent legal framework with effective supervision and management based on market signals.

In reality, after more than 10 years of implementing Decree 24/2012/ND-CP, the State Bank of Vietnam's monopoly on the production of gold bars under the SJC brand has revealed many shortcomings. Domestic gold prices are consistently higher than world prices, distorting the market, causing losses for the people, and leading to increasingly sophisticated smuggling activities.

According to Mr. Long, this monopoly mechanism needs to be quickly abolished. Instead, market participation should be expanded to businesses that meet strict requirements regarding technology, finance, governance, and legal safety. At the same time, the state should soon establish a national gold exchange – an electronic trading platform with a transparent mechanism, standardized pricing, and the ability to control money flows and gold investment activities in a civilized manner.

"Macroeconomic stability, flexible exchange rate and interest rate management, and liquidity are prerequisites for reducing the role of gold as a safe haven. In addition, gold held by the public can be mobilized through electronic gold certificates, gold accounts, and linkages with the banking system. This would both help people secure their assets and create additional resources for the economy," Mr. Long proposed.

What do banks and gold companies say?

Following the inspection's conclusions, some businesses and banks have begun to take steps to rectify their violations. However, experts believe this is only a short-term measure. In the long term, a new legal framework is needed to ensure that the gold market is no longer a "playground" for a select few, but becomes a transparent, healthy, competitive market integrated with the global economy.

The large price difference leads to smuggling.

At the end of June 2nd, the price of SJC gold bars in the domestic market was commonly listed by businesses at 115.8 million VND/ounce (buying price) and 117.8 million VND/ounce (selling price), a decrease of approximately 700,000 VND/ounce compared to the previous trading session. Meanwhile, the spot price of world gold according to Kitco was recorded at approximately 3,347 USD/ounce, equivalent to 105.7 million VND/ounce (according to the current exchange rate), which is about 12 million VND/ounce lower than the price of SJC gold.

At one point, this price difference widened to as much as 17-18 million VND/ounce, causing serious irrationality and distorting the market.

Some businesses explain this price discrepancy as being due to a scarcity of domestic gold supply, while demand from the public remains high. However, according to many experts, the real reason stems from a closed and uncompetitive distribution model. The fact that only a few entities are licensed to distribute SJC gold bars under current regulations has created a monopolistic gold market that does not accurately reflect supply and demand and is susceptible to price manipulation.

This situation has also led to serious consequences regarding gold smuggling. According to data from the General Department of Customs, in the first four months of 2025 alone, authorities discovered and seized 350 kg of smuggled gold, nearly three times more than the same period last year. This figure clearly shows the impact of the price difference between domestic and international gold and the shortcomings in the current management and distribution mechanisms.

Source: https://nld.com.vn/thiet-lap-lai-thi-truong-vang-196250602214157985.htm