The world and domestic gold markets are experiencing huge waves. While the world gold price has surpassed the $2,000/ounce mark and is expected to soon find its all-time high in the next few days, the price of SJC gold and SJC gold has increased even more. However, not only has it increased rapidly, SJC gold has also "plummeted" due to selling pressure.
However, the highlight of the domestic gold market is not only that but also lies in the difference between the buying and selling prices of SJC gold being too high, the difference between the price of SJC gold and the world gold price far exceeds the safe threshold.
We had a discussion with Dr. Nguyen Tri Hieu, a banking and finance expert, about this issue.
Gold traders pass risk onto buyers
Sir, why did domestic and world gold prices increase so strongly this week?
- This is the million dollar question. There are external and internal factors that cause the price of gold to increase sharply.
In terms of external factors, the value of the USD has been low for a while now, with the Dollar Index still at 107 a month ago and now at around 102. This is the result of the US Federal Reserve (Fed) leaving open the possibility of raising interest rates after two rounds of holding them steady. However, current figures show that the US is controlling inflation better. This is a sign that interest rates may cool down, thereby supporting gold.
Domestic and world gold prices are fluctuating strongly together. Photo: Hoang Tu
In terms of internal factors, our economy is stagnant, financial markets are not improving. The stock market is constantly fluctuating, in a negative direction. Bonds are frozen. Real estate is stagnant, ceilings are low. Savings interest rates have dropped sharply. All these forces push gold prices up.
Domestic gold prices increased more strongly than the world due to the impact of the world market and the weak internal economy, giving the feeling that gold is the safest haven.
In the current market, there is a huge gap between buying and selling prices, up to 1.4 million VND/tael. What does this number mean, sir?
-Recently, the selling price was about 1 million VND/tael higher than the buying price, but now, this number has reached 1.4 million VND/tael. This huge gap shows that traders buy at a low price but sell at a very high price.
The large gap also shows that businesses themselves are feeling greater risk and are passing that risk onto consumers. However, this is a free market, businesses are free to decide their own selling prices, the State Bank does not impose ceiling or floor prices.
The difference between the buying and selling price is so high that businesses buy at low prices and sell at high prices, and buyers take on the risk of fluctuations. The bigger the difference, the more risky businesses feel and pass the risk on to consumers.
In my opinion, a difference of 500,000 VND/tael or less in buying and selling prices is acceptable. A difference of more than 500,000 VND is very risky.
Not only is the difference between buying and selling prices too high, the difference between SJC gold price and world gold price is also up to 14 million VND/tael. Is this a risk for buyers, sir?
- The difference of 14 million VND/tael between SJC gold price and world gold price is very high. It shows that domestic gold trading is at a higher risk than the world market. The gap of 5 million VND/tael is reasonable.
Don't put all your eggs in one basket.
Gold prices are slowing down after a sharp increase. What do you think is the upcoming trend of gold? Can gold prices continue to increase?
- Gold prices are slowing down but are still on an upward trend because gold is a more attractive investment channel than many other channels. However, it should be noted that the gold market always has many large fluctuations and brings many risks, the risks in the domestic market are even greater than the world market.
Sir, should investors buy gold at this time? If so, how should they buy it?
- As I said above, the gold market has many risks but is the most attractive channel. Therefore, in my opinion, this is the time for investors to buy gold. However, buying also needs to follow the principle of "not putting all eggs in one basket". Investors should only spend 1/3 of their money to buy gold.
Second, we must always closely monitor the domestic and international gold market, hourly and daily.
Third, do not surf with the expectation of short-term profits. Surfing is very risky. Investors should hold gold for at least 6 months.
Fourth, absolutely do not borrow money to buy gold.
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