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Gold shops bustle while gold trading floors remain quiet   2010-01-07 - VietNamNet/TBKTSG

In-kind gold transactions are increasing following the decision to shut down gold trading floors.

Nguyen Cong Tuong, an executive of the Saigon Jewelry Company (SJC), said the company is selling over 10,000 taels a day – a volume which much higher than previous months. Meanwhile, the volume of gold it is purchasing remains modest.

One tael is equal to 1.2 ounces.

According to Tuong, the gold demand is increasing considerably as investors think see a way to make reasonable profits with minimal risks.

People still believe the gold price will continue to risa as the world fears the return of high inflation. The $1,300 dollar per ounce threshold is expected to arrive in early 2010, and has prompted people to purchase gold now to re-sell later, when the price goes up

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Company (PNJ) said the volume of gold it sold in the first week of January was higher by 30 percent than the same period of December 2009. The company is now selling some 2,500 taels per day, while it sold only 1,500-2,000 taels per day in the first week of December 2009

The gold shops on Ben Thanh Market area in HCM City have also reported that the volume of gold being purchased is a little higher than the sale at the end of 2009. They also said that there are more buyers than sellers.

While gold shops are bustling these days, gold trading floors have no investors. Thoi Bao Kinh te Vietnam’s reporters, who were present at VGB gold trading floor at 10 am of January 5, said that they saw idle seats on the floor, despite New York’s market witnessing a sharp price increase in the previous night’s trading session

VGB’s officers said the number of investors on the floor dropped dramatically following the decision to shut down gold exchanges. Many investors have closed accounts, others only make modest transactions

However, according to Tuong, the in-kind gold sale has increased since the shutting down of gold exchanges, however, there is no clear evidence proving that the in-kind gold increase has been created by the decision.

Moreover, Tuong said, it is not easy for gold investors, who get used to trading gold on account, to shift to trade gold in-kind, because in order to trade gold in-kind, they need to have 100 percent of the capital needed. This means that if investors only withdraw small sums deposits from gold trading floors to invest in the in-kind gold market, their small transactions will not be powerful enough to affect the in-kind gold market.

The gold price at 4 pm on January 6 was at 26.81-26.88 million dong per tael (purchase and sale). Meanwhile, the world’s price was nearly 1,120 dollar per ounce. As such, the world’s price is lower by 800,000 dong per tael lower than the domestic price.

Though gold trading firms see the gap between the world and domestic prices, it is now not the time to import gold. The gold import under the quota granted recently by the State Bank of Vietnam finished on November 27, 2009 and it seems that the State Bank does not intend to allocate new quotas for companies.

Other news

Gold shops bustle while gold trading floors remain quiet   2010-01-07

Gold Market Review 2009   2009-12-28

Too early to tax gold investors?   2009-12-22

Gold dives below VND27 million a tael   2009-12-13

Local gold prices track global slide   2009-12-10

Gold price continues to rise sharply   2009-11-23

Gold uncertain, pessimism on stocks unwarranted   2009-11-23

Gold price continues to rise sharply   2009-11-23

Gold reaches record high prices in Vietnam   2009-10-15

Gold jumps to 18-month high on weaker dollar, inflation outlook   2009-09-13

Banks raise gold rates to attract deposits   2009-09-13

Local gold breaks VND22 million   2009-09-09

Gold climbs to VND21.37 million a tael   2009-08-05

Gold prices down, purchases up   2009-07-07