Bullion market’s latest moves in focus

The development reflects the confusion in Vietnam’s gold market in the aftermath of the State Bank’s decision to turn SJC into a national gold brand under governmental Decree 24/2012/ND-CP which took effect from late May 2012.

Vietnam Gold Business Association (VNBA) deputy chairman Dr. Dinh Nho Bang argued the State Bank (SBV) move has prompted a mess in the nation’s bullion market. The decision to transform SJC into a national gold brand, Bang said, was unreasonable since SJC was in fact a business entity only.

Disorder in Vietnam’s bullion market would linger, Bang said, until there was a proper remedy to current monopoly status in the gold market.

Gold has long been coveted in Vietnam as a hedge against economic uncertainty.
Earlier, SJC gold experienced a price fever where its price was set VND3-4 million ($143-$190) per tael higher than that in the world marketplace as well as gold bars of other brands.

In the questioning section before National Assembly deputies last week SBV Governor Nguyen Van Binh unveiled the probability the central bank issues a new gold brand after all gold brands in the markets were converted into single SJC brand and a decent gold bullion trading network is in place.

Rival gold firms and members of the public, however, insisted that the SBV should not bestow too many preferences on SJC although it was chosen to act as national gold brand.  At present, SJC gets the right to verify gold quality and make gold bars under orders placed by the SBV.

Before launching the new brand, some experts say, the SBV should ensure effective management of this brand through using diverse management tools.

“There needs  to be a set of standards pertaining to national gold brand parallel to explicit regulations on the functions and processes involving gold appraisals,” said Dr. Nguyen Minh Phong.

Economists argued that the State Bank recognised SJC as national gold brand has prompted the bullion market’s instability in the past months.

Business owners and executives were also anxious about the fact that in the past time only SJC held monopoly in making gold bars and verifying the quality of all gold brands in the market.

To address these concerns, the VNBA called on its members to establish a joint stock business specialising in verifying gold quality with around VND10 billion ($470,000) initial chartered capital.
 
The company is slated to come online from 2013 in Ho Chi Minh City.  VNBA has also mulled opening another business carrying the same functions in Hanoi, according to Bang.

However, gold firms’ prime concerns now were whether the SBV would recognise appraising results of the firms founded by VNBA members or not.