Vietnam central bank exposes tactic to hoard gold, inflate prices

People have been hired to queue up at gold sale points in order to hoard the precious metal and inflate prices, “causing market instability and damage to the economy,” Vietnam’s central bank alleged Friday.

But the State Bank of Vietnam (SBV) rejected rumors that it was short on gold bullion supplies, asserting it had “sufficient resources and determination” to stabilize the local gold market.

In its Friday statement, the SBV said it was coordinating efforts with the police to verify and strictly handle acts of speculation and market manipulation.

The SBV started selling SJC-branded gold bars Monday to four state-controlled commercial banks – Agribank, BIDV, VietinBank, and Vietcombank, and Saigon Jewelry and Germ Stone Co. (SJC), for the latter to sell them to end buyers.

Since then, gold bullion prices have dropped by a combined VND4 million ($157.3) a tael.

On Friday, the SBV sold gold bars to the five state-owned entities at VND75.98 million ($2,988.5) a tael. The five entities in turn sold the metal to end buyers at VND76.98 million a tael, or VND1 million higher, to cover their expenses.

From a peak at VND92.4 million ($3,634.3) a tael in early May, gold prices in Vietnam have plunged VND15 million and the premium to global prices has been narrowed to just VND4 million a tael, down five times from last month.

In its latest statement, the SBV also reiterated that it will continue to supply gold bars to meet the legitimate and legal demands of citizens.

In addition, the bank is leading multi-agency inspection teams to find out violations of gold trading regulations, particularly in Hanoi and Ho Chi Minh City.

At some points of sales of state-owned banks in Hanoi, there have been long lines of people from early morning since Monday to buy a limited quantity of gold bars each.