In an official statement released on March 20, the State Bank affirmed that SJC has been officially assigned the task of make bullion gold. With the SJC’s capacity of 80,000 taels (3 tons) per day, the supply would exceed the demand in a short time, which would help narrow the gap between the domestic and the world’s prices, according to Dau tu.

The State Bank has affirmed that the move, plus the other factors, such as the stable dong/dollar exchange rate and the downward in the world’s prices, all will help curb the domestic prices and ensure the reasonable price gap.

Le Hung Dung, President of SJC, has confirmed that SJC is making bullion gold for the State Bank, but has declined to reveal the amount of gold to process. Meanwhile, analysts have estimated that SJC has put out more than 10 tons of gold over the last week. As such, the amount of gold to be churned out by SJC may reach 20-30 tons by the time when the State Bank officially organizes bullion gold auctions.

Dinh Nho Bang, Deputy Chair and Secretary General of the Vietnam Gold Business Council, said on Dau tu that previously, Vietnam imported some 30 tons of gold a year. However, not the whole amount of 30 tons was converted into bullion gold and consumed domestically. It was estimated that 1/3 of the amount was used to make jewelries. Besides, a big volume of the imports was re-exported.

As such, Bang said, the market would see the excessive supply if State Bank just markets 10-20 tons of bullion gold.

Infonet has quoted its sources as saying that the first gold auction may be organized this week at the soonest, or in late April.

A senior executive of a big gold trade company in Hanoi said his enterprise is looking forward for the first auction.

“Under the current regulations, the State Bank would send a notice about the auction one day in advance. We are really expecting the auction which we hope would help warm up the market,” he said.

It’s still unclear when the auction would be organized this week, but a source said the auction would not be organized on Friday, because the prices fluctuate heavily at the end of weeks, while the world’s opening and closing time does not coincide with the Hanoi’s time.

Analysts put a high hope on the gold auctioning, believing that once a big volume of gold is marketed, this would immediately cool the market down and narrow the gap between the domestic and the world prices.

However, they are not sure if this should be the long term measure for the gold market control.

The price gap existing for the last long time is believed to be caused not by the supply-demand imbalance, but because of the speculation. Therefore, the supply increase would not help settle the problem to the every root.

Bang thinks that this should be seen as a temporary solution only, while in the long term, the State Bank should allow to trade gold on accounts to ease the demand for in-kind gold.

Vietnamnet