Non-SJC gold prices depressed following new regulation

Previously, the State Bank of Vietnam confirmed that Decree 24 on the management of gold trading activities did not discriminate between SJC (Saigon Jewelry Co), Vietnam’s biggest gold refiner and trader, and non-SJC gold bars.

Even if sold to the original manufacturers, the prices of non-SJC gold have also been lowered below the listed prices.

The reason: cannot be resold

Dung, the owner of two taels (75 grammes) of SBJ gold bars produced by Sacombank Jewelry Co, received her first rejection when trying to sell the gold bars to a shop on Phan Dinh Phung Street in Phu Nhuan District.

The shop owner told her they could not buy the gold since they could not resell it, as customers now choose SJC gold bullion only.

Bringing the gold bullion to a shop on Pham Van Hai Street in Tan Binh District, she got a price VND3.4 million lower than that of SJC.

The owner told her the same thing, adding that non-SJC gold bullions can now be used to make gold jewelry.

For the final showdown, she brought the gold bars to the parent company of the gold bar marker, District 3-based Sacombank, only to find that the price was VND3.48 million lower than its listing price on the electric board outside.

"Non-SJC gold bar customers are at a disadvantage with the slow move of SBV in releasing the plan for gold bar transition,” she told Tuoi Tre.

Not only SBJ gold, but also gold bars from many other brands such as NJC, Rong Thang Long, and AAA, are suffering a similar fate.

Thang Long Dragon gold bars’ bid price was listed at the Hanoi-based Bao Tin Minh Chau Co, the manufacturer, on late Wednesday afternoon was at VND40 million a tael, while that of AAA and SJC gold bars was VND40.2 million a tael VND41.18 million a tael.

KH gold shop owner on Pham Van Hai Street said that compared to the peak in August last year, gold prices have fallen VND6-7 million a tael and have very weak purchasing power.

Previously, gold shops traded tens of taels of gold every day. Currently, the trading volume per day is only 5-7 taels. Nguyen Thi Cuc, deputy general director of PNJ, says the gold transactions of the company declined very sharply.

On the most exciting trading day, gold sales reached less than 500 taels, while the daily volume for normal days is at around 200-300 taels, down 90 percent compared to the past.

"We are waiting for circulars giving the guidelines from SBV to re-register our business functions," Cuc said.

Urging for transition roadmap, fast adaptation

To resolve this situation, gold companies have proposed that SBV announce its conversion plan early in order to ease public concerns.

Currently, since there is no guidance, non SJC gold bars can only be bought, not sold, thus forcing gold firms to lower prices to minimize their buying activities.

Some experts said that SBV should allow banks to organize testing for non-SJC gold bullion to check if they are sufficient in weight and quality to switch to the SJC gold. SBV may collect some fees, about VND60,000 a tael, as the SJC did previously.

Nguyen Van Dung, chairman of the HCM City Association of Fine Arts, Gold, Jewelry and Gemstones, said there are more than 2,000 gold shops, most of which have registered capital just under VND10 billion and make tax payments of a few million dong a month. 

Therefore, very few units meet the conditions for trading gold bars under the decree, in which a business must meet the standards of VND100 billion or more in chartered capital, with two years experience in the field and have already paid taxes of VND500 million a year for the past two consecutive years.

Dung said that most gold shops traded gold bars and jewelry in the past, so now they might switch to trading only gold rings and gold jewelry.