Police to join Vietnam central bank-led gold market inspections

Representatives from the Ministry of Public Security will join central bank-led inspection teams that are looking into gold trading at local credit institutions and companies.

Following a decision announced by the State Bank of Vietnam (SBV) on Friday, other inspection members will come from the Government Inspectorate, Ministry of Finance, and Ministry of Industry and Trade. The inspections will last 45 days.

Inspectors will check compliance of regulations on gold trading, anti-money laundering, accounting and invoicing, and tax obligations between January 1, 2020 and May 15, 2024.

The move comes after strong fluctuations in the local gold market, with the price hitting an all-time high of VND92.4 million ($3,631) a tael and the domestic-international price gap widening to VND20 million ($786) a tael.

Amid concerns over the impact of gold volatility on national financial security, the Vietnamese government has aggressively directed relevant authorities to rein in the local gold market.

Prime Minister Pham Minh Chinh on Thursday ordered the immediate adoption of various tools and measures to regulate and stabilize the gold market more effectively and in a timely manner. Chinh requested the gap between Vietnamese and global gold prices be narrowed and violations strictly handled. He also requested the serious implementation of electronic invoices in gold trading and revocation of licenses from traders who fail to do so by June 15.

To calm the gold fever, partially caused by undersupply, the SBV last month resumed gold auctions after an 11-year hiatus. However, responses from local banks and companies have been tepid.

The SBV has sold a combined 27,200 taels, equivalent to 1.02 tons, of SJC-brand gold bars in seven auctions, just 23% of the quantity put up for auction. Three of the seven auctions attracted no bids.

The banking regulator will hold another two auctions on May 21 and 23, offering 16,800 taels each. Participants can place orders of between 500 and 4,000 taels.

“In the coming time, the SBV will coordinate efforts with relevant agencies in drastically implementing comprehensive solutions with the goal of radically eliminating large gaps between domestic and international gold bullion prices,” the SBV noted, advising citizens to be cautious when participating in gold transactions to minimize risks.

Economist Le Xuan Nghia reckoned that the price premium would reduce to zero in just one week if local firms were allowed to import gold.

However, researchers with the Hanoi-based Vietnam Institute for Economics and Policy Research (VEPR) and Think Future Consultancy said in a report released Friday that administrative measures such as inspections, probes into price manipulation, and the increased use of electronic invoices will lead to the immediate stabilization of the local gold market, rather than allowing massive imports.