Vietnam gov’t vows to tighten gold market as high prices linger

The Vietnamese government is taking action to tighten control over the local gold market as prices of the precious metal remain high despite the central bank’s resumption of auctions after an 11-year hiatus.

Deputy Prime Minister Le Minh Khai has requested the Ministry of Public Security and the Government Inspectorate to join a multi-disciplinary force to inspect the gold market.

At a meeting chaired by Khai on Tuesday, the State Bank of Vietnam (SBV) proposed representatives of the Ministry of Public Security, the Government Inspectorate, and the ministries of finance and industry & trade to join inspection teams.

The SBV said it expected to finish scanning the market today before announcing inspection results next week.

Khai also asked the Ministry of Public Security to immediately handle any violations detected during the inspection.

At the meeting, participants argued that gold is not an item subject to the price stabilization program, meaning that the government does not intervene to control gold prices. The SBV holds a monopoly on gold bullion production, not gold trading.

However, given its dual characteristics as a goods item and a currency, the SBV is responsible for intervening to ensure a level playing field to harmonize the interests of stakeholders, while strictly handling violations and market manipulation.

They also proposed the SBV lower its starting prices to make the auctions more attractive to local companies. In the long-term, the government should amend Decree 24/2012 in the direction of abolishing the monopoly of SJC-branded bars and switching to managing pure gold bullion.

Despite the central bank’s gold auctions, SJC-branded bar prices hit a record high of VND92.4 million ($3,630) a tael last Friday.

Gold prices cooled to VND87.3-89.8 million ($3,528) a tael for buying and selling at state-owned Saigon Jewelry and Germ Stone Co. (SJC) on Wednesday morning. However, the prices were still VND17 million ($668) higher than global prices.

In a related move, the Ministry of Finance on Tuesday requested tax and customs agencies to curb gold smuggling into Vietnam.

The tax authorities need to check on electronic invoices issued by gold traders and forward criminal violations to the Ministry of Public Security for further proceedings.