Proposal to establish a Gold Exchange for effective management

According to Professor Dr. Hoang Van Cuong, National Assembly Delegate, Member of the National Assembly's Finance and Budget Committee, Vietnamese people often have a mentality of risk prevention, preparing for the future, so they have a high mentality of hoarding. Therefore, the need for people to own, buy and sell gold bars is not only for "jewelry" but also to accumulate and have assets for protection. That is a legitimate demand.

“If we do not develop the gold bar market, maintain a monopoly on only SJC gold bars, supply is low, demand is high, of course prices will increase, leading to people sometimes being afraid, rushing to buy gold and the price of gold will be pushed up again. We must open up, must create conditions for many businesses to do business, should not monopolize one product to create a larger, more widespread, equal, competitive supply. The more competition in supply, the more beneficial it is for buyers, prices will be equal, there will be no more unreasonable price increases. If we only maintain the physical gold market, people buy it to keep in cabinets, safes at home, it is only safe for those with money, but whether it is profitable or not and whether that money can be put into circulation is the problem”, Professor Dr. Hoang Van Cuong wondered.

Professor Dr. Hoang Van Cuong said: If Vietnam has a gold exchange, people will change their mentality. People do not have to go far, do not have to worry about storing gold, do not have to worry about whether the gold is real 9999 or not?... because the gold certificate will guarantee the correct value. Gold will be on the market, goods will be circulated on the market.

“We operate on the State side, manage the market, we ensure the management of foreign currency. In addition, when gold is put into trading on the market, the order matching is public and transparent, anyone participating will immediately know how many sellers and buyers there are in the market… Transparent information helps market participants make wiser decisions, especially when the State controls it well,” said Professor Dr. Hoang Van Cuong.

Some opinions say: Another important point is that it is necessary to connect the domestic and world gold markets. If Vietnam has a gold market with trading accounts on the exchange, the connection will be easy. It is not necessary to import, but it is possible to place a buy and sell order to exchange world gold immediately, that creates price balance with the world trading market.

Dr. Tran Tho Dat - economic expert, Chairman of the Science and Training Council, National Economics University said: "If we follow the fluctuations of gold prices in recent times, we see that the sheltering nature of gold is high, but the profitability is not very high. The price of gold in the past year shows that the fluctuation of gold prices is only about 5 - 6%, much lower than the interest rate and even much lower than the interest rate in the US market today".

In the past 5 years, the price of gold has fluctuated by 40-50%, not to mention the devaluation of the USD. Some estimates estimate that the current gold reserves of the people are 300 tons, while others estimate 400-500 tons. These are estimates but are a large number that needs to be mobilized as financial resources for socio-economic development.

“But to mobilize this resource and build a gold market in the future, the State Bank needs to develop specific conditions and criteria for the gold market that we propose to be the Gold Exchange. In terms of recommendations, I think that in the coming time, we need to quickly refer to the experience of many countries to allow the Commodity Exchange to trade gold futures through contracts, such as futures contracts, options contracts like advanced countries in the world, but at the same time, participating members must meet strict standards and be allowed to import and export gold based on the contract conditions... issued by that exchange,” said Dr. Tran Tho Dat.

In addition, Dr. Tran Tho Dat also proposed: It is necessary to establish a gold exchange-traded fund (ETF) as an international financial instrument and this fund certificate can also be purchased on the exchange to encourage people to deposit gold, invest in production, business and investment, instead of holding gold bars.

If this trust fund can participate in trading modern derivative products like the world's exchanges, the gold trust fund will play the role of a stabilization fund, reducing pressure on monetary policy makers and regulators when gold prices fall, contributing to creating a stable macroeconomic environment.