A gold move for market

One week after the Saigon Jewellery Company (SJC) - a major player retaining a 90 per cent of the market share relative to gold products - again declared to stop buying deformed SJC gold bars which had worried consumers  State Bank (SBV) deputy governor Le Minh Hung later last week suggested businesses and residents not to try to sell this gold at low costs since the SBV would soon finalise regulations ruling SJC gold bar production and trading.

The document reportedly covers conversion of deformed SJC and non-SJC gold bars into SJC gold bars. Accordingly, all sorts of deformed SJC gold and standard non-SJC gold bars will be liable to be converted into SJC gold bars upon demand. The document slated to make public within this week.

In this context, SJC’s Gold Business Department Nguyen Cong Tuong said the company would not resume deformed SJC gold purchases when it had yet to receive any guiding document from the central bank.

Tuong said in the past SJC’s Member Council decided on founding a VND200 billion ($9.5 million) fund to buy back and store deformed SJC gold to support local residents as in light of governmental Decree 24/2012/ND-CP dated April 3, 2012 the company was unable to continue processing gold bars.

“With 13 per cent per year interest rate, we have to pay VND460,000 ($21) interest for one tael of deformed gold bar, irrespective of risky prices,” Tuong said.

In the past months, Phu Nhuan Jewellery JSC (PNJ) bought in and kept in stock a big volume of PNJ gold and increased sale of SJC gold bars to serve customers, said PNJ’s deputy general director Nguyen Thi Cuc.
The company then hoped central bank’s guiding documents would be soon in place.

Since the enactment of Decree 24 on gold business management which came into force from May 25, 2012 and articulated state monopoly status on gold bar production and trading and the intention to turn SJC gold bars into national gold brand people rushed into selling non-SJC gold.
Deformed gold bar holders were also in a critical situation and had to accept to sell products at lower than regulated prices.

Vietnam Gold Business Association Dinh Nho Bang assumed this came from unclear state policies. The State Bank then needed to work out a clear and transparent plan on SJC gold conversion to soothe the public.

According to figures from gold bar trading companies, there area around 22 million gold bars produced by eight local firms in the domestic market. Of them, about 20 million pieces carry SJC brands. Deformed gold bars kept by SJC reportedly amount to 7,000 taels.