'Some laugh, some cry' in the gold price rush

Those who hastily bought dozens of gold bars at the "hot" price of 39-40 million VND now only regret it, while gold traders had two unexpectedly bustling days and earned a significant amount of revenue.

On July 6, the market witnessed many people coming to gold shops to trade, in which the number of buyers accounted for the majority - a rare thing during the past few years of quiet trading. A customer named Mai happily squeezed through the crowd, smiling brightly as she told her friend that she was waiting at the headquarters of Saigon Jewelry Company to buy gold. After about ten minutes of waiting, she finally bought 10 taels. And that was also the time when SJC gold bars reached 40 million VND - setting a record price since June 2013.

However, Ms. Mai did not expect that this peak would not last long and quickly turned around and dropped sharply by about 2.8 million VND on the trading day of July 7, bringing the selling price of the gold shop at the end of the day to nearly 37.2 million VND, while the buying price was 36.7 million VND. This means that within just 24 hours, if Ms. Mai resold, she would lose up to 3.3 million VND per tael, or 33 million VND for 10 taels of gold.

Gold price fever often brings "pain" to many people who want to invest in surfing at the peak price.

Following the gold rush on July 6, perhaps not only Ms. Mai but also many other "amateur" gold investors spent money to buy right when the price was at its peak of 40 million VND, only to now suffer bitterly because the price dropped too quickly.

Ms. Huong Giang, District 6, Ho Chi Minh City, calculated that the 4 taels of gold she bought at 3pm yesterday (for about 39.5 million VND) have now lost more than 11 million VND. "For rich people, that amount of money is nothing, but my husband and I are civil servants living on our salaries, how can we make that much money in one day?" she lamented.

In Hanoi, around 10am on July 7, a woman in her 50s wearing a face mask stood in front of Bao Tin Minh Chau's gold shop on Tran Nhan Tong Street, Hanoi. She hesitated, half wanting to go in, half not, so she kept asking the security guard how much gold was now. She said that yesterday her nephew had just bought 12 taels when the price was nearly 40 million, so now hearing the news that the price had dropped to more than 36 million VND (the purchase price) made her feel regretful. "Yesterday, when I saw him buy it, I was planning to go out this morning to buy one tael to stock up, but when I got here, I saw more people selling, so I was also panicked," she honestly said.

Meanwhile, those who bought gold at a low price but did not have time to sell immediately when the price was high also did not hide their regret. Inside the Bao Tin Minh Chau store, there was a long line from the entrance to the second floor - the gold bar trading area. After 10am, when the staff here announced that only those who bought gold would be given priority to go to the second floor first, the sellers would have to queue and even those who sold more than 2 taels would not be paid in cash immediately because "the fund ran out".

Hearing this information, Ms. Ngoc (who was planning to sell nearly ten taels of gold she bought at the end of last month for 33.6 million) became even more impatient. "If we wait in line for a long time, the price might drop even more when we get to sell. I checked the internet this morning and it was only 39 million, but when I got there, it was already more than 37 million," she said.

Meanwhile, for gold traders, the past two days have been considered a surprisingly "bumper harvest" after a long period of market silence.For example, at DOJI Gold and Gemstone Group, on July 6, they sold 1,400 taels of gold and bought 900 taels at a high price of about 38-39 million VND. On July 7, a representative of this business said that in the first hour when the price had just dropped slightly, the number of buyers was still high, but then sellers came in droves. From morning to noon, this system bought nearly 1,000 taels, at an average price of about 36.7-37 million VND.

Many people bought dozens of gold bars even when the price was very high and the difference between buying and selling was up to 2 million VND. Photo: Anh Tu.

Thus, if only calculating the profit from the difference between the buying and selling price of one million VND per tael on July 6, with 900 taels (sold - bought on the same day), this enterprise earned more than 900 million VND. As for July 7, in the morning alone, it purchased nearly 1,000 taels at a price of around 37 million VND, which is 2-3 million VND per tael lower than the selling price yesterday, the enterprise also made a decent profit.

Similarly, Saigon Jewelry Company - SJC on July 6 and 7 also recorded a total transaction volume of more than 3,000 taels - a fairly large number after a long period of stagnation. Meanwhile, at PNJ, a company representative said that in the past two days, the total purchase and sale volume also reached about 1,100 taels, many times higher than previous normal days.

"Compared to previous days, the transaction volume doubled or even 2.5 times. At the end of yesterday, when it was almost closed, there were still customers asking to buy more. Most of the people came due to crowd psychology, when the price difference was over 2 million VND, they still went to buy, and when the price dropped, they rushed to sell," added a DOJI representative.

Experts said that on July 6, there was an artificial scarcity, pushing the domestic gold price higher than the world price in the past week. The widening gap between buying and selling gold prices, according to Mr. Tran Thanh Hai, General Director of Vietnam Gold Company - VGB, means that businesses have pushed the risk onto the people because the difference between buying and selling prices is a million VND per tael, so when buying, customers are considered to have accepted a loss of one million VND and must wait for the price to increase to this level or higher before selling. Meanwhile, the high gap helps gold businesses make a profit.

However, there are also opinions that the State does not need to manage this difference because after businesses buy gold and release it to the market, when the market goes up, the price goes up, when the market goes down, the price goes down and it will automatically adjust to the balance.

A long-time expert in the gold industry analyzed that the State Bank can monopolize gold imports and should not control the ceiling price of gold sales. This is the right thing to do to avoid rigid guidance or devaluation of the market. If the State Bank imposes a selling price, when the gold price increases, the operator is forced to release gold for sale at a lower price. That is even more dangerous.

"Nowadays, people have the right to choose. It is the right to buy or refuse. If it is cheap, buy it, if it is expensive, don't buy it anymore. Anyone who wants to speculate or surf must accept a 50:50 risk probability," he said.

On July 6, although the world price stagnated, the domestic gold price increased hourly with an adjustment of millions of dong, causing businesses to aggressively widen the buying and selling margin to limit risks. Accordingly, at the beginning of the day, the difference fluctuated around 400,000 dong, then increased to 700,000 dong at the end of the afternoon and officially reached 1 million dong in the middle of the afternoon until the end of the day.

On July 7, domestic prices fell in the opposite direction to international prices, and the buying and selling margin gradually narrowed, remaining around VND600,000 per tael at the end of the day. Businesses all explained that they widened the difference to proactively hedge against risks from unpredictable market fluctuations.

In the face of the fever and cold of gold prices, the State Bank has also spoken out and said that the recent market fluctuations are only temporary, with no clear trend. Multi-dimensional information from the world market has affected domestic psychology. Many experts have continuously warned investors and people to be cautious to avoid losses. "Therefore, people need to be extremely calm in all their buying and selling decisions, avoiding unnecessary risks that cause damage to themselves like in the previous period," the State Bank leader advised.

According to VNE