Risks in the gold market that investors need to know to avoid losses

Ignoring expert advice, losing more than ten million dong after 1 week

The last week of 2023 was the most “shocking” time for gold investors. After buying at an all-time high on December 26, before the New Year holiday, investors quickly suffered heavy losses.

Specifically, at noon on December 26, the price of SJC gold jumped to an unprecedented high of VND80.30 million/tael after increasing by VND2 million/tael. Since then, the precious metal market has been “shaking” strongly, mainly in a “free fall” trend.

On the afternoon of December 30, the gold market was in chaos, with each store listing a different price. At Saigon Jewelry Company – SJC, the only unit allowed to produce SJC gold bars, the listed price of SJC gold was: 69.50 million VND/tael – 72.50 million VND/tael.

Thus, compared to the “peak” set at noon on December 26, the price of SJC gold has decreased by 7.8 million VND/tael, equivalent to 9.71%. However, because the selling price is 3 million VND/tael higher than the buying price, investors have suffered a record loss of more than ten million VND/tael.

In fact, investors can completely avoid this loss if they pay attention to the warnings about risks that experts constantly give.

Dr. Nguyen Minh Phong, former Head of Economic Research Department, Hanoi Institute for Socio-Economic Development, once shared that there are 3 factors for the market being driven by psychology and bringing many risks. Those are the difference between domestic gold price and world gold price, the difference between buying and selling price of SJC gold is too high and the gold price increases too strongly in 1 day.

Dr. Nguyen Tri Hieu, a banking and finance expert, also said that the two biggest risks in the market are the difference between domestic prices and world prices and the difference between selling and buying prices being too large.

According to Dr. Nguyen Tri Hieu, the domestic price should only be about 5 million VND/tael more expensive than the world price, the selling price should only be 500,000 VND/tael more expensive than the buying price. However, during this time, these two figures were up to 13 million VND/tael and 1 million VND/tael respectively. At this time, the gap has reached an unimaginable level, the price of SJC gold is more than 12.50 million VND/tael more expensive than the world price, the selling price is 3 million VND/tael to 6 million VND/tael higher than the buying price.

Gold prices still have differences

On December 28, in the telegram on solutions for managing the gold market, Prime Minister Pham Minh Chinh issued Telegram No. 1426/CD-TTg requesting the State Bank to immediately implement solutions to stabilize the gold market. Absolutely do not let the economy "goldenize", do not let it negatively impact exchange rates, interest rates, the money and foreign exchange markets, and national financial and monetary safety and security; have effective solutions to manage and operate domestic gold bar prices according to market principles, do not let the gap between domestic and international gold bar prices be as high as in the past, negatively affecting macroeconomic management, and report on implementation results in January 2024.

Currently, the two biggest risks for gold investors are the large difference between domestic and international prices and between selling and buying prices. However, the difference is different for each company.

On the afternoon of December 30, the price of SJC gold at Bao Tin Minh Chau was listed at: 69 million VND/tael - 72.40 million VND/tael; at Doji Group it was 68 million VND/tael - 74 million VND/tael. The price of SJC gold at SJC Company and at Phu Nhuan - PNJ Company was bought and sold at: 69.50 million VND/tael - 72.50 million VND/tael.

Thus, the difference between selling and buying SJC gold is lowest at SJC Company and PNJ Company with 3 million VND/tael. The difference at Doji is highest, up to 6 million VND/tael, followed by Bao Tin Minh Chau with 3.4 million VND/tael.

By listing the selling price 6 million VND/tael higher than the buying price, Doji Group is in the highest "defense" mode, while at the same time, buyers bear the greatest risk.

Also at Doji, SJC gold price has the biggest difference compared to world price.

Specifically, at the end of 2023, the world gold price stopped at nearly 2,063 USD/ounce. At this world gold price, the converted SJC gold price reached about 61.68 million VND/tael.

Thus, the price of SJC gold at Doji is 12.32 million VND/tael higher than the world price. The difference at the remaining units is about 11 million VND/tael.

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