Domestic gold prices have been consistently lower than foreign gold prices for the past two months, causing jewelry and raw gold to be smuggled abroad.

Since March, domestic gold prices have been on a downward trend, with domestic prices being lower than world gold prices. At times, the price difference between the two markets was up to 600,000 - 700,000 VND/tael (while at times, domestic prices were more expensive than world prices by over 6 million VND/tael).

Gold jewelry is a commonly smuggled item.

Mr. Huynh Trung Khanh, an international gold industry expert, said that the general rule is that whenever there is a difference of about 2% between domestic and international gold prices, there is a phenomenon of gold smuggling.

Mr. Khanh cited a specific example: in India, the import tax on gold is 10% while in Thailand it is 0%. Because of such a huge difference, in 2013 - 2014, hundreds of tons of gold jewelry from Thailand were exported to India under the spirit of the Free Trade Agreement between the two sides.

According to Mr. Tran Thanh Hai, Chairman of Vietnam Gold Trading and Investment Joint Stock Company, a difference of only 1% can still lead to gold smuggling, because gold has a very large material value. If the gold price is 33 million VND/tael and the profit is 2%, it means that one tael will make a profit of 600 thousand VND.

Therefore, when gold reversed in the direction of domestic prices being lower than world prices, Mr. Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City branch, also warned about the situation of gold being exported abroad.

According to Mr. Minh, gold smuggling currently takes two forms: One is raw gold (gold taels, polished gold kilograms)… cut into small pieces and two is gold jewelry. In return, besides receiving USD, gold smugglers can also receive some items with higher profits.

“However, the current scale of smuggling is very small and insignificant. Monitoring market developments shows that this does not affect the domestic gold market. Currently, the State Bank of Vietnam and the Market Management Department, Ho Chi Minh City Police and other units are also actively coordinating on this issue,” said Mr. Minh.

According to Traffic Newspaper