VietNamNet Bridge – Unexpectedly lowering the sale price to the level which is 500,000 dong per tael lower than the market price, Bao Tin Minh Chau has stirred up the investors in Hanoi.

In general, the buy and sell prices of Vang Rong Thang Long brand bullion gold of Bao Tin Minh Chau are equal to that of SJC (the Saigon Jewelry Company) in Hanoi, or just lower by tens of thousands of dong per tael.

Therefore, no one can explain why the company has decided to reduce the prices sharply by 500,000 dong per tael in recent days. At 10.55 am of November 10, Bao Tin Minh Chau quoted the prices for Rong Thang Long at 45.30-45.90 million dong per tael (buy and sell). The prices were lower by 300,000 dong per tael than that quoted by SJC Hanoi at the same time.

Meanwhile, at 4.25 pm of November 10, Bao Tin Minh Chau continued lowering the gold sale price to 45.70 million dong, while it bought at 45.20 million dong per tael. Meanwhile, SJC Hanoi kept the quoted prices unchanged. Especially, SJC’s sale price even increased slightly by 50,000 dong per tael in comparison with the morning’s price.

As such, Rong Thang Long of Bao Tin Minh Chau on the afternoon of November 10, was cheaper by 550,000-800,000 dong per tael than SJC gold.

In principle, if goldsmith companies want to restrict transactions at the moments, when the market fluctuates, they always push the sale prices up and lower the buy prices at the same time. However, it seems that Bao Tin Minh Chau does the opposite thing this time. It has reduced the sale prices in order to stimulate the demand, while it has also reduced the buy prices.

Some other goldsmith companies, which have their own bullion gold brands (not SJC, and not the member of G5+1, i.e. the institutions which are allowed to sell gold to stabilize the market), also tend to reduce the gold prices.

The gold market these days proves to be unpredictable, especially since the day the State Bank of Vietnam submitted to the government a draft decree on the gold market management. The draft decree says that only the enterprises which have 500 billion dong in chartered capital or more, and hold the market share of 25 percent and bigger in the last three years, will be able to make bullion gold.

If the draft decree is approved by the government, seven out of the 8 current bullion gold producers, except SJC only, will have to stop producing bullion gold. Of the 7 producers, there are very well known brands such as Rong Thang Long, SBJ or PNJ.

At 11 am of November 10, PNJ quoted the prices at 45.90-46.16 million dong per tael, which was 100,000 dong per tael lower than the buy price of SJC, and 40,000 dong lower than the sale price of SJC. Similarly, Sacombank-SBJ quoted the same buy price as SJC’s, but its sale price was lower by 50,000 dong per tael.

Nguyen Minh Chau, Director of Bao Tin Minh Chau Company, said that the demand is now weak, while the supply is profuse; therefore, he decided to reduce the sale prices in order to stimulate the demand.

Nguyen Ngoc Que Chi, General Director of Sacombank-SBJ, said that on November 9, the shops of the chain bought and sold 800 taels of gold only. She said that the demand was not improved on November 10.

However, Chi has denied the fact that the information about the draft decree on gold trade activities management affects the pricing policy of SBJ.

Sources from gold trade companies said that 80-90 percent of transactions on the market now are jewelry trade, while there are very few bullion gold transactions. The owner of a gold shop near Ba Chieu Market in HCM City said that people mostly come to buy jewelry, while they do not buy bullion gold because they still listen for the news.

Source: VnExpress