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Inspection report on gold trading activities being complied, SBV says
vietnamnews - 10/28/2024 3:15:54 PM
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In May, SBV launched an inspection campaign focussing on law compliance of gold trading enterprises, part of efforts to narrow the gap between international and domestic gold prices.
 
 
 
People flock to a gold shop in Hanoi. — VNA/VNS Photo Tran Viet 
 
The State Bank of Vietnam (SBV) has announced that inspections on compliance with legal policies in gold trading activities of credit institutions and gold trading businesses have been completed and an inspection report is being compiled. 
 
In May, SBV launched a campaign focussing on law compliance of gold trading enterprises. The inspection is part of efforts to narrow the gap between international and domestic gold prices.
 
The inspection team comprised representatives from the SBV, the Government Inspectorate, the Ministry of Public Security, the Ministry of Finance, and the Ministry of Industry and Trade.
 
The inspection period spanned from January 1, 2020, to May 15, 2024, compassing adherence to legal regulations concerning gold trading, including anti-money laundering, accounting and invoicing practices, tax declarations and fulfilment.
 
The inspection aligned with the Prime Minister’s official dispatch on strengthening measures for gold market management and the directive on monetary policy management for 2024, with a focus on addressing challenges in production and trade, promoting growth, and ensuring macro-economic stability. 
 
In addition to the inspection, the state bank is also finalising a report proposing amendments to the Government’s Decree 24 from 2012, which includes provisions on managing the production of gold bars to refine the legal framework for regulating gold trading activities.
 
The report takes into consideration practical circumstances while selectively adopting international experiences, particularly from countries with similar business environments and political institutions to Việt Nam.
 
Many economic experts appreciate SBV’s efforts to narrow the gap between domestic and international gold prices, but argue that stronger and more effective solutions are needed to increase the gold supply. Although people’s demand for gold is legitimate, it currently faces many obstacles.
 
Sustainable solutions needed 
 
Economist Ngô Trí Long said that since the end of 2023 until now, Vietnam has witnessed turmoil in the domestic gold market. Local gold prices have increased due to the sharp increase in world gold prices, an imbalance in supply and demand, and limited supply.
 
As an urgent solution to solve the shortcomings of the gold market, Long suggested that the authorities allow official gold imports to address the supply shortage
 
Long told baotintuc.vn that the SBV's current solution to stabilise the gold market do not adequately meet local gold demand in terms of quantity. 
 
He added that people find it difficult to buy large quantities of gold because gold stabilisation units sell in limited quantities.
 
Therefore, it is necessary to urgently amend Decree No 24 on gold trading, Long said, calling on the authorities to create a distribution system that will provide people with favourable trading conditions, creating a level playing field for all economic sectors.
 
Meanwhile, senior financial expert Nguyễn Trí Hiếu said that the current political and military conflicts in Ukraine, the Middle East and the impending US presidential election have been driving up world gold prices because investors view gold as a safe haven. 
 
In addition, many central banks continue to buy gold to increase national reserves, especially in the context of global economic instability and fluctuations in foreign currencies. Gold is still considered an important and stable component of national reserve portfolios.
 
According to Hiếu, the long-term solution for sustainable management of the gold market is to amend Decree 24, enabling the SBV to assign gold imports to reputable and financially capable gold traders while focus on the SBV's role as a market manager rather than a directly participant.
 
As a manager and supervisor of the gold market, the SBV would allocate gold quotas to traders licensed to import gold by the bank, Hiếu told baotintuc.vn. 
 
He also emphasised the importance of establishing a national gold exchange and allowing gold investment funds to issue gold certificates, while encouraging people to invest in these funds instead of keeping gold at home.
 
On October 25, the world gold price cooled slightly but was still trading above the peak of US$2,700 per ounce. Domestically, SJC gold bars were traded at VNĐ89 million (over $3,500) per tael. DOJI gold rings were equal to gold bars at VNĐ89 million per tael, while SJC gold rings were priced at VNĐ88.5 million per tael.
 
Some economic experts predict that the world gold price could reach $2,800 per ounce if the geopolitical situation remains as tense as it is now, potentially even reach $3,000 per ounce in 2025.  
 
Caution advised 
 
However, experts advised gold investors to be cautious with both short-term and long-term investments. 
 
Financial expert Phan Dũng Khánh said that gold investors with short-term appetites can participate but they should only hold a moderate proportion and aim for moderate profit.
 
If investing for the longer term from three to five years, investors can consider buying gradually. If the gold price drops and they have money, they can buy more, Khánh told doanhnhansaigon.vn
 
He explained that the gold price, in addition to being affected by the gap between buying and selling prices, is also influenced by the exchange rate. Holding gold is not like real estate or shares. If house prices fall investors can always make returns through rentals, and they can still receive dividends if stock prices decrease.
 
Financial expert Nguyễn Trí Hiếu agreed, saying investing in the gold market now carries high risks, and investors should be cautious.
 
If there is a need to buy gold, it is advisable to buy only a small amount, avoiding ‘putting all your eggs in one basket’, even though global gold prices are expected to remain on an upward trend, Hiếu said. — VNS
 
Read original article here
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