Gold policy alchemy starts to take shape

Recently the Ministry of Science and Technology (MoST) enacted a circular on management and measurement of gold trading and quality assurance of gold in the market.

The circular regulates the measurement in weight of gold used for trading, the allowed tolerance limit between actual weight and published weight, classification, labeling of jewelry, and organisations authorised to determine gold content.

Accordingly, gold shops that don’t satisfy the requirements on measurement and quality management will be forced to close.

The State Bank of Vietnam (SBV) has also enacted several documents governing the gold jewelry business.

What is still lacking is that between the circular and SBV documents there is nothing requiring firms to prove gold origin, meaning it is easier for illegal gold to find its way into jewelry production.

“At current, jewel makers are not allowed to import gold, so they source material from diverse sources, making it extremely hard to prove material origin,” said jewelry business Bao Tin Minh Chau Company general director Vu Minh Chau.

Chairman of the Vietnam Gold Business Association Dinh Nho Bang noted that gold hoarding is a long tradition of Vietnamese people and therefore a system requiring firms to trace the origin of their gold would be very burdensome.

A senior expert suggested the state bank systematically register gold volumes kept by the community to drive down illegal imports.

“The SBV may start buying unused gold from people to be converted into SJC gold. Jewel makers need to identify their products under a shared standard observed by the SBV. In doing so, idle gold will start being identified and registered,” said the expert.

According to a source from the central bank, they are strongly considering buying gold from the community but have not yet decided when to take action.

Banking expert Nguyen Tri Hieu warned that if the SBV started buying gold, the already wide gap between the domestic and global price would be further stretched.

Hieu said the maximum acceptable price gap would be VND1 million ($47).

Gold trading businesses expect the SBV will buy not only SJC gold, but that of other brands as well to increase foreign currency reserves and serve the domestic market through its gold auctions.