Eliminate speculation in SJC gold bars

The Ho Chi Minh City People's Committee has just issued a decision to establish a Working Group to ensure the security of the local gold market (hereinafter referred to as the Working Group). The task of the Working Group is to collect and analyze information, data, and the situation of customers buying and selling gold bars in the area. Inspect organizations and individuals with signs of suspicion of speculation, profiteering, and causing instability in the local gold market.

Collect gold buyer information

The working group is also responsible for coordinating inspections and checking compliance with legal regulations on gold trading by establishments buying and selling gold bars and producing and trading gold jewelry and fine art.

Also according to the decision of the Ho Chi Minh City People's Committee, the representative of the City Police is the head of the Working Group, responsible for gathering information and advising the City People's Committee on solutions to help stabilize the gold market. Directing police units to deploy work to grasp the situation, detect individuals and organizations suspected of gold smuggling and gold buying and selling for speculative profit.

Deploy professional measures to verify, investigate and clarify suspicions, fight and handle according to criminal law (in cases where there are sufficient elements to constitute a crime) or transfer information to competent authorities for handling according to regulations on administrative sanctions.

The purchase of SJC gold bars in Ho Chi Minh City will be strictly controlled to prevent speculation. Photo: HOANG TRIEU

The representative of the State Bank of Vietnam (SBV) Ho Chi Minh City Branch is the deputy head of the Working Group, responsible for collecting and transferring to the Ho Chi Minh City Police information, documents, and lists of individuals who bought gold at SJC gold bar sales points of Saigon Jewelry Company (SJC) and 4 state-owned commercial banks including Vietcombank, Agribank, BIDV and VietinBank (performed daily). Research solutions and advise SJC Company and 4 state-owned commercial banks to proactively detect suspicious individuals who are hired to buy gold, collect gold; promptly provide information to the Police force to deploy professional measures.

Other departments in the Working Group, such as the Ho Chi Minh City Tax Department, the City Market Management Department, etc., are responsible for quickly verifying the cash flow, the source of money for gold purchases, and supporting the collection of documents at banks (account opening records, account statements, transaction documents, etc.) to clarify suspicions of gold buying and selling, and gold leasing. Strengthen inspections of gold trading establishments in the area to promptly handle violations under their authority, especially the trading of smuggled goods, goods of unknown origin, goods with counterfeit trademarks, etc.

On the commercial bank side, recently, the Bank for Foreign Trade of Vietnam (Vietcombank) announced that it only accepts registration to buy SJC gold bars from individual customers who have payment accounts opened at this bank and are in operation.

Vietcombank explained that changing the conditions for registering to buy SJC gold bars online is to increase service quality and facilitate customer information management; ensure the transportation of gold bars is convenient and safe...

Previously, BIDV also implemented registration to buy SJC gold bars for customers who meet the conditions of having a VND account at BIDV and must have enough money in the account at the time of registration to buy gold.

The Vietnam Bank for Agriculture and Rural Development (Agribank) also plans to apply this method. According to Agribank leaders, selling gold to customers with accounts opened at the bank will help reduce the time required to carry out the customer identification process and contribute to preventing money laundering.

Need long term solution

Gold expert Tran Duy Phuong said that the solutions recently implemented by the Ho Chi Minh City People's Committee, as well as the solutions of the Government and the State Bank of Vietnam in recent times, will help narrow the gap between the price of SJC gold bars and the world price. In particular, the new decision of the City People's Committee regarding collecting information on buyers of SJC gold bars will help prevent speculation, price manipulation, and profiteering in the gold market. "At that time, only those with real needs and long-term gold holdings will buy. The psychology of rushing to buy SJC gold bars will decrease," said Mr. Tran Duy Phuong.

According to Associate Professor Dr. Nguyen Huu Huan, senior lecturer at the University of Economics Ho Chi Minh City (UEH), recently when the State Bank of Vietnam (SBV) started selling SJC gold bars directly to people through the system of 4 state-owned commercial banks and SJC Company, there was a situation of "two prices" for gold, that is, the official selling price and the price on the free market. The reason is that the market demand is still high but the number of people who can buy gold bars is not much, so these people have brought gold out to sell to make a difference. Therefore, in the long term, more solutions are needed to make the gold market more sustainable.

At a recent regular press conference, Deputy Governor of the State Bank of Vietnam Dao Minh Tu also stated that the mechanism of selling gold directly through state-owned commercial banks has initially been effective. The initial basic goal of handling and controlling the price difference between SJC gold bars and world gold prices within a suitable range has been achieved. However, this is only a short-term policy, and how to make it suitable in the long term is a difficult problem.

In fact, experts have repeatedly suggested that in order for the gold market to develop sustainably, it is necessary to study and amend Decree 24/2012/ND-CP in the direction of eliminating the monopoly of the SJC gold bar brand and the monopoly of gold bars and the monopoly of gold imports of the State Bank... Associate Professor, Dr. Nguyen Huu Huan said that the solution that can be applied soon is to study the property tax on gold to reduce the attractiveness of this investment channel.

"Goldenization" causes great harm to the economy, especially to macroeconomic stability. In fact, governments of all countries want to eliminate gold from circulation, because if people hold a lot of gold, it will greatly affect the domestic currency. For example, in the US, during the period of 1933 - 1971, this country banned people from owning 99.99% pure gold, only allowing the use of jewelry gold, and at the same time clearly regulating the jewelry gold ratio. Normally, countries regulate the jewelry gold ratio at about 60% - 70%, depending on the country, Vietnam can regulate jewelry gold below 75% to avoid profiteering" - Associate Professor, Dr. Nguyen Huu Huan said.

Another solution proposed by Associate Professor Dr. Nguyen Huu Huan is to conduct a pilot study on gold certificates. The US once banned the ownership of physical gold and switched to selling gold certificates to people when the domestic currency depreciated sharply.

Accordingly, the State Bank can issue gold certificates through the state-owned commercial banking system and still hold the gold because this is an important foreign exchange reserve. People can buy and sell gold certificates through the state-owned commercial banking system. When they need capital, they can bring it to the bank to exchange for VND or mortgage it to borrow capital. The price of gold is determined by the State Bank.

"Issuing gold certificates will help reduce the attractiveness of the gold market, because people holding paper will be different from holding physical gold. Measures are needed to limit people's psychology when owning physical gold, directing people to other markets to support better economic development" - Associate Professor, Dr. Nguyen Huu Huan proposed.

Enterprises must be responsible for the origin of gold.

The State Bank of Vietnam, Ho Chi Minh City Branch, has just sent an official dispatch to enterprises engaged in the production of gold jewelry in the area. According to Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City Branch, the production of gold jewelry is a field that has a direct relationship and impact on the gold market, the effectiveness of macro management and market stability, and socio-economic development.

Therefore, it is required that enterprises operating in this field strictly comply with and take responsibility before the law for the origin of raw gold for the production of gold jewelry... Enterprises must also comply with the provisions of the law on accounting, creating and using invoices and documents.

Source: https://nld.com.vn/triet-dau-co-vang-mieng-sjc-196240730202119095.htm