VietNamNet Bridge – Commercial banks have been trying to withdraw from the “gold game.” Once a big demand source is eliminated, the gold market is believed to be more “peaceful.”

Game is nearly over

Some weeks ago, the State Bank of Vietnam said commercial banks would have to buy 20 tons of gold more to pay back matured gold deposits to people. The information then raised the worries that banks would face the liquidity problem and the gold prices would fluctuate heavily at the end of the year.

However, the latest information from commercial banks showed that the gold market has become more peaceful after the central bank applied drastic measures to force banks to give up the “gold game.”

In fact, commercial banks themselves have got tired of mobilizing and lending in gold, and they themselves want to quit the game.

Three commercial banks have reportedly stopped accepting gold deposits, while nine others have set up their plans to stop the game. Many banks plan to have payment finalization before the deadline, possibly by April 30, or May 30, 2013, or June 30, 2013 at the latest.

At present, banks still have to keep buying gold, and they would still have to continue buying after November 25. However, no big changes have occurred on the domestic market, even though the world price is on the rise.

In principle, banks would have to buy 20 tons of gold, worth 33 trillion dong. However, banks still keep calm, while they reportedly do not hurry to buy gold at this moment.

Big demand cut, the market would be smooth

The State Bank has never named the names of the influential power on the gold market, but a deputy governor of the State Bank said on VnExpress that “big players” would quit the game, just after some months.

The domestic gold price has always been higher by some million dong per tael than the world price. The State Bank of Vietnam has been facing the violent criticism that it has not done anything to narrow the price gap.

However, speaking before the National Assembly, Governor of the State Bank Nguyen Van Binh stated that no need to stabilize the gold price at this moment, when Vietnam needs to gather its strength to deal with top priority macroeconomic matters.

Binh also believes that no need to grant quotas for importing gold now, because the imports would not help settle the problem to the every root. In the past, the State Bank many times allowed to import gold to stabilize the domestic market. However, the gold market just cooled down for some days before the gold price skyrocketed again.

According to VnExpress, Binh, when speaking before the National Assembly, admitted that the enforcement of the new policies is one of the factors that has generated a big gap between the domestic and world prices.

However, he believes that in the long term, this would help restore the order on the gold market and fight against the goldenization in the national economy. Once the influential power in the market is eliminated, the prices would be stable.

The mechanism which was set up 10 years ago allows banks to buy, sell, mobilize capital and lend in gold. They can also convert gold for dong to have more capital. In the golden age, gold sometimes accounted for 30-50 percent of the total assets of a bank. The profit from gold reportedly made up 50 percent of the banks’ income.

Ngoc Son