Gold and the Curse of the Name 'xi-C'

There are many stories about human affairs related to gold, but when it comes to "xi-C", the curse of "xi" is much more dramatic.

After following the gold market for many years, I have found that there seems to be a curse called "xi-C". If you want to be rich, you have to go through "xi-C", if you want to escape losses, you also have to go through "xi-C", and bankruptcy and imprisonment are also because of "xi-C". Even the State Bank has a "headache" because of "xi-C".

But "xi-C" is also associated with many fluctuations, ups and downs, causing discomfort to the economy and changing the fate of many families, causing businesses to go bankrupt, banks to suffer, and businessmen to go to jail. These events have been evident for nearly 30 years, and especially when banks mobilized gold 20 years ago, the curse of "xi-C" has shown its true form.

The curse of decades

SJC gold bars were born in the late 1980s and have contributed a lot to economic life. The first director, who was also one of the people who created SJC gold bars, did an unprecedented thing that few Vietnamese businesses could do, which was to create the SJC four-number-9 gold brand that is always more valuable and popular than world standard gold and Swiss gold.

Gold bars, gold nuggets... from the world to Vietnam, if sold as gold bars, must be melted and stamped into "xi-C". Other famous gold businesses, although also having their own gold bar brands, still mainly trade in "xi-C".

"Xi-C" gold is the dream of many people, a precious asset to keep. But over time there have been too many changes, sometimes no power can overcome "Xi-C" and perhaps from that has formed the curse of "Xi-C", sometimes equally cruel.

How terrible is the "xi-C" curse? It's not that SJC gold bars are now higher than the world's. It's been like that for decades. Anyone who has gold, called raw gold, regardless of where it comes from (stored or officially imported or other sources...), as long as they have an invoice, they can bring it to SJC Company to have it stamped into gold bars for a fee of only a few tens of thousands of VND/tael.

Those who had gold and could stamp it into gold bars made a big profit because they could always sell it for a higher price than the world price. At that time, the stamping capacity of SJC Company was limited, so banks and businesses lined up to wait to be stamped into "xi-C". Many people were impatient because they had spent money to buy gold bars but had not yet produced "xi-C", so the big profit had not yet flowed into their pockets.

At that time, the State Bank did not allow gold imports to save foreign currency, but it was unclear where the gold came from, but people still lined up to be stamped into "xi-C". Making "xi-C" was a hit. If you kept Swiss gold or gold bars, you might lose money if the world price fell.

Gold mobilization, the price is too high

But the "xi-C" curse has caused trouble since the State Bank allowed banks to mobilize and lend gold. People's gold was deposited in banks. Banks had too much gold, 30% of which was sold to get VND capital for lending.

Tons of gold were sold on the market, the gold price fell dramatically, lower than the world price. So "xi-C" gold was also melted and sold across the border. But the September 11, 2001 terrorist attack on the US, the world gold price could only go up, at this time the "xi-C" curse swept through banks, businesses, and individuals who borrowed "xi-C".

They were scrambling to find "xi-C" to pay off their debts, but it was like being "struck by lightning twice". One was that the world's gold price was rising steadily, and the second was that everyone was looking to buy "xi-C", not a few tens of thousands of taels but many tons to pay off their debts, causing the price of gold to skyrocket, threatening to affect the USD exchange rate and the entire economy.

Even if you have gold but are not "xi-C" yet, you cannot pay the debt, because "I lend you "xi-C" and you have to pay with "xi-C", "xi-C" is more valuable". Then the gold debt of 1 grows into 5, then 10 over time, even 15, paying forever, how can you not go bankrupt!

When the "xi-C" curse spread to the gold-mobilizing banks, it forced the State Bank to do something unprecedented. Mr. Nguyen Van Binh, then governor of the State Bank, convinced the Ho Chi Minh City People's Committee, the governing body of SJC Company, to transfer the SJC gold bar brand to the State Bank for management with many purposes.

The first is to help banks gradually get "xi-C" - which was previously mobilized and lent but melted and sold across the border - to pay back to the people. Next is to stop the goldification of bank capital (only VND and foreign currencies remain) and in the long term, reduce the goldification of the economy.

Millions of dollars were spent to import gold to mint "xi-C" to pay people. Yet it took several years to completely erase "xi-C" from bank capital. But the losses persisted. Because "xi-C" was sold at a low price and bought back at a high price, most people who borrowed gold at this time suffered losses. Mobilizing gold capital, receiving "xi-C" and paying back in "xi-C" was too expensive for both the economy and the people involved.

When will the "xi" curse be broken?

After the State Bank's rather costly cleanup, gold was forgotten but the "xi-C" curse remained. Although the "xi-C" stamping dies were carefully kept in a sealed safe for many years, even SJC Company was not allowed to touch them, to open the seal, the State Bank's board of directors was required, but then the "xi-C" curse spoke up again after ten years.

The price of "xi-C" gold is more than ten million VND/tael higher than the world price. The media continuously reported, the gold business community responded, the State Bank had to sell "xi-C" to bring the price down to near the world price, despite receiving mixed opinions and the effectiveness was not as expected by gold enthusiasts.

It can be said that the curse of "xi-C" has always made it difficult for the State Bank to manage foreign exchange for many years. This place even went to the step of monopolizing, locking the "xi" stamping molds in the warehouse, not selling more "xi" to the market for many years to prevent goldification, but it still did not calm down. Recently, the price of "xi-C" has skyrocketed.

Now, using foreign currency to import gold to have "xi-C", if the domestic gold price is lower than the world price, gold will flow across the border. If imports are reduced, "xi-C" will skyrocket, all efforts will be in vain. Foreign currency belongs to the people, serves the interests of the whole economy, contributes to stabilizing inflation, why pour it into gold?

Continuing to stamp and sell more "xi-C" on the market also goes against the Government's consistent policy against "goldenizing" the economy. The vicious cycle of the "xi-C" curse has not been overcome to this day.

Recently, through the inspections of the State Bank of large gold enterprises, the curse of "xi-C" has spoken out again to enterprises with violations. Perhaps from there, the irregularities will be exposed to the light and the curse of "xi-C" will be dispelled.

Only after the "xi-C" curse is resolved, the entanglements of the gold trading system, the legal framework for the gold market (Decree 24) which is being complained about as too cramped, will be changed. Without the "xi-C" curse being resolved, many gold shops are still operating in an "underground economy" style, and the gold market will certainly have to endure a cramped legal "clothing". But it is better to be cramped than to open up so that the "xi-C" curse affects everyone.

Returning the SJC brand without allowing gold imports is another kind of trouble, it is difficult to escape the "xi-C" curse. That is the manager's choice. Although knowing that the jewelry industry is struggling because of the lack of gold for production. The few people who are still interested in gold complain about the unreasonable gold price. After all, they are also victims of the "xi-C" curse.

Gold capital mobilization: very scary because it is difficult to step through "xi-C"

Recently, when the price of SJC gold is higher than the world price, there have been many contributions and suggestions for gold market management, gold capital mobilization such as opening gold floors, gold account trading... These are things that the world has been doing and is doing.

In Vietnam, some of these operations have been implemented but all... were unsuccessful. Because whether it is a gold exchange or a gold account, people still turn to "xi-C". Even though it is gold in an account, taking it out must be... "xi-C".

With the gold floor, its consequences are huge, causing many people to go bankrupt, many famous tycoons also went down, got into trouble with the law just because of the gold floor. The whirlwind of the gold floor, at that time considered as "gambling mats" wiped out the assets of many people, put pressure on the exchange rate, caused extremely large risks to the economy, forcing the Government to order the closure of the gold floor at the end of 2009.

Immediately after that, the State Bank decided to stop mobilizing and lending gold, focusing on cleaning up and ending it from May 2012, but its consequences many years later have not been fully resolved.

As for gold accounts, how many people would accept to buy gold without holding the gold in their hands? Actually, nearly 30 years ago, the founder of the SJC gold bar brand also learned from international experience and built a "paper gold" plan to send to the State Bank of Ho Chi Minh City. That is, instead of receiving a gold bar for storage, the SJC gold buyer will be given a certificate of ownership of the gold bar by the company. This plan was not approved because issuing "paper gold" is also capital mobilization, a function that only banks have.

For many years and up to now, people have believed in gold certificates or deposits issued by banks, but "paper gold" issued by companies... not yet, or rather not. Because people understand that banks are much more strictly managed than companies, and the risks are greater. Therefore, if there is any gold account, only banks issue it, but the State Bank has banned it for a long time.

So far, with the State Bank mobilizing gold capital from the people, the best way is to make people buy less gold, sell the gold they have stored to get capital for business. The policy is clear "anti-goldenization of the economy" and has been relatively successful. Society no longer pays in gold, will the State Bank return to selling more "plated" gold, opening gold accounts...!?

Source: https://tuoitre.vn/vang-va-loi-nguyen-ten-xi-c-20240922080853434.htm