National Assembly Deputies Warn of "Money Pouring into Gold"

At the socio-economic discussion group on the morning of May 23, National Assembly delegates expressed concern about the recent "dancing" gold price.

Mr. Ha Sy Dong, Standing Vice Chairman of the People's Committee of Quang Tri province, acknowledged that in the past two years, domestic gold prices have always been higher than international prices, with a difference of 15-20 million VND per tael. "This makes the domestic gold market more sensitive, stimulates speculation and smuggling, affecting the exchange rate," Mr. Dong commented.

Compared to the beginning of the year, domestic SJC gold bars increased by nearly 24%, while the world price increased by 20%. What people are concerned about, according to Mr. Dong, is "who is responsible for the sudden increase in precious metals in the country, where is it from?"

"The price of gold is increasing due to the pure reason that this is an alternative investment channel to saving money, or because of an interest group with illegal acts, such as asset dispersion, speculation causing market disorder," he raised the issue, adding that the Government needs to have a fundamental solution for the gold market.

Mr. Nguyen Dai Thang, Deputy Head of the National Assembly Delegation of Hung Yen province, also said that there must be a solution to fundamentally solve the situation of price fluctuations.

"The large difference between domestic and world prices is the reason for more smuggling, money flows not into production but into gold and land," said Mr. Thang.

In fact, recently, when the domestic gold price increased sharply, many people rushed to buy gold. At some point, many big brands "sold out" of gold bars and plain rings.

Since April 22, the State Bank has started calling for bids for SJC gold bars to increase supply to the market. After 9 sessions, 6 sessions have been successful. In total, over the past month, over 48,000 taels of gold bars have been released to the market by the regulator.

However, according to many National Assembly deputies, this solution is not effective when in reality "heats up the market again". Mr. Tran Van Lam, Standing Member of the Finance and Budget Committee, said that the method of implementing the recent gold auctions did not have a clear target. According to him, the floor price - the level announced by the authorities for businesses to bid - was high, so winning units had difficulty selling at a lower price.

To bring domestic gold prices closer to international prices, he said that authorities need to accurately and fully calculate domestic production costs, plus import costs and other costs to make the starting price for bidding.

"Recently, the bidding floor price was close to the market price, so it was ineffective. Do we want to sell gold at a high price to collect money, or bid to stabilize the market and people's psychology?", Mr. Lam raised the question.

In this aspect, Mr. Hoang Van Cuong, Vice Principal of the National Economics University, also said that "after each auction, the gold price increases". Because the floor price is high, when businesses win the bid, they have to sell at a higher price than they bought, causing the price to continue to increase.

"Thus, the goal at this time is not to reduce the price but to auction gold to earn more money. If the goal is to reduce the price and connect the domestic with the international, the reference price must be equal to the world price plus taxes, fees and demand," Mr. Cuong suggested.

On the other hand, Mr. Pham Duc An, Chairman of the Bank for Agriculture and Rural Development of Vietnam (Agribank), said that the phenomenon of prices increasing as bidding increases only appears in the initial stage.

In fact, since the bidding session on May 14, authorities have adjusted the frequency and volume of bids with more reasonable minimum and maximum levels.

"After perfecting the mechanism, the bidding method will avoid this phenomenon," Mr. An said, adding that it is necessary to evaluate all aspects to have appropriate management policies. "If we do not want the economy to gold-ize and affect the exchange rate, then strict control of the gold market is essential," he shared.

In theory, bidding is a solution to increase supply to neutralize market demand, thereby helping to "cool down" the price of gold bars closer to the world. However, the increase in precious metals will affect people's psychology, affecting production and business.

This afternoon, the price of SJC gold bars has decreased by more than 1 million VND per tael, falling below the threshold of 90 million VND, about 17 million higher than the world price. Specifically, Saigon Jewelry Company (SJC) listed the price of gold bars at 87.8-89.8 million VND per tael, down 1.1 million VND compared to the end of yesterday. The buying and selling price range narrowed to 2 million VND.

National Assembly deputies suggested that the State should soon take fundamental measures to stabilize domestic gold prices, at least to the same level as the world. Mr. Hoang Van Cuong proposed to amend Decree 24 on gold trading management. According to him, this Decree was only effective in the previous period, but is having the opposite effect in managing this market.

Chairman of the Economic Committee Vu Hong Thanh is also impatient because Decree 24 has not been amended yet, despite being mentioned many times. Mr. Thanh said that the Economic Committee will organize a session to explain the management of the gold market.