Gold bar auction canceled again

The State Bank of Vietnam has just sent out a notice to cancel the gold bar auction this morning, May 3, because only one unit submitted a bid. The reason for this cancellation is similar to the reason for the cancellation of the auction on April 25.

This is the third time the State Bank has canceled the gold bar auction. Previously, on April 22, the State Bank canceled the first gold bar auction due to the lack of members registering to bid and depositing money according to regulations.

The second cancellation was on April 25, with the reason being that only one unit submitted a bid.

The only successful auction on April 23 had 2 winning members. The total winning volume was 34 lots (equivalent to 3,400 taels of gold). The highest winning bid price: 81.33 million VND/tael. The lowest winning bid price: 81.32 million VND/tael.

In the morning session of May 3, the total volume of gold bars expected to be auctioned is 16,800 taels of SJC gold bars.

Participating units are required to deposit 10%, the reference price to calculate the deposit value is 82.9 million VND/tael. The minimum bidding volume each member is allowed to buy is 14 lots (equivalent to 1,400 taels), the maximum bidding volume is 20 lots (equivalent to 2,000 taels).

The bidding price step is 10,000 VND/tael, the bidding volume step is 1 lot (100 taels). Thus, the regulations on gold bidding remain unchanged compared to the previous 3 sessions.

Many opinions say that because the State Bank still maintains the conditions for bidding, it is very likely that today's trading session will continue to be "sluggish" because the regulations make businesses and credit institutions hesitant.

According to Mr. Dinh Nho Bang, Vice President of the Gold Business Association, having too few or no gold contractors proves that the gold bidding regulations still have unreasonable conditions and do not ensure risk reduction for participating organizations.

If the bidding conditions are revised by the State Bank to be attractive enough, businesses can balance risks, and more organizations will participate in gold bidding.

Experts say that capital is currently a difficult problem for many businesses, which partly affects their decision to participate in bidding when having to buy gold in large quantities. Meanwhile, the State Bank of Vietnam is stipulating that the minimum number of winning gold lots is 14 lots, equivalent to 1,400 taels.

Expert Tran Duy Phuong analyzed that the gold supply at businesses is lacking, but not too much. Therefore, businesses and organizations participating in bidding only aim to buy the necessary amount of gold, according to business needs.

“For example, last week they sold at a negative price of about 1,000 taels, so they need to buy 1,000 taels to compensate for the sold status and buy a little more for retail or to serve other needs. At this time, they will participate in the bidding.

But if they previously sold only about 500 taels, but the bidding regulations require buying at least 1,400 taels, then supply exceeds demand. Therefore, this condition is preventing businesses from participating in bidding," he said.

At the same time, the expert also said that at the present time, gold prices fluctuate unpredictably and are full of risks, certainly no business buys gold for speculation. Therefore, demand is not too high.

They only need to buy an amount that is just enough to cover the amount of gold they sold or have a little extra. “For example, if they are negative 1,000 taels of gold, they will buy about 1,200 - 1,400 taels. But if they are only negative 500 taels, forcing them to buy 1,400 taels is very difficult.

If the State Bank of Vietnam changes the conditions, allowing gold purchases at only 400 - 500 taels, for example, it will certainly attract more businesses to participate," the expert stated.

Associate Professor, Dr. Dinh Trong Thinh said that the State Bank should review the reference price. The 10% deposit when bidding while the reference price for deposit is high is also an issue that makes businesses and banks consider and calculate before participating in bidding.

"When spending a large amount of money to participate in the bidding, businesses must consider how to make a profit. Therefore, to make the next gold auctions more effective, the State Bank needs to determine a reasonable bidding price that suits the needs of businesses, to easily attract them," said Mr. Thinh.