Crying because SJC gold is about to be cheaper than the world

While the world gold price has skyrocketed, the domestic price has remained stable. The difference between the two markets in recent sessions has been only a few tens of thousands of dong, making those waiting to sell gold restless.

In the first two months of 2016, world gold prices increased by 16% while they decreased by more than 10% last year.

On February 11 (the 4th day of Tet), when he saw the world price hit a one-year high of 1,260 USD, Mr. Nguyen (Trung Kinh, Hanoi) was secretly happy because he thought it was time to sell off 10 SJC gold bars that he bought for 35 million VND last year. However, after the Lunar New Year holiday, the gold shop reopened but the price only increased at the opening and then decreased immediately afterwards. "Waiting for the whole month of February, the gold price is still hovering around 33 million VND and I don't understand why it has nothing to do with the world," Mr. Nguyen wondered.

Domestic gold prices are increasingly approaching world prices.

Like Mr. Nguyen, many other people have had to sell their gold when they waited for the domestic price to increase but it still did not follow the world price. Currently, each ounce of international gold is still maintaining its "form" when it is stable at around 1,240 USD. Converted to Vietnamese currency at the bank exchange rate, each ounce of world gold is about 33.4 million VND (excluding taxes and fees).

Early afternoon of March 3, domestic gold businesses were still buying and selling at around 33.4-33.5 million VND. Thus, the domestic gold price is now equal to the international price (buying price) and only slightly higher than 100,000 VND for selling price. "In 2015, the price difference between domestic and international prices was still a million VND. If it continues to be like that this year, will I have less loss?", said Mr. Nguyen.

In February alone, the price of this precious metal increased by 10.6% in the world but the domestic gold price only increased by more than 2%. Explaining the disconnect, Ms. Tran Nhu My - Director of gold trading at DOJI Gold and Gemstone Group - said that the price is determined by supply and demand. "Everyone wants a high price to sell, but gold businesses do not know where to 'sell' because domestic demand is too weak. If the international price continues to increase, it is possible that SJC gold will be cheaper than the world price," Ms. My said.

The representative of Phu Quy Jewelry Company - Mr. Le Xuan Tung - also believes that domestic gold is cheaper than the world's gold price can happen. According to him, the price of SJC gold bars with the world's price should not be compared 1:1 because the domestic supply is currently controlled, the price increase or decrease will depend on demand.

"However, there is no demand for gold speculation among the people, only small-scale accumulation. Besides, in 2015, people bought a lot because the price went down, now that the world is going up, they expect to sell rather than buy, making demand even weaker," said Mr. Tung.

In response to information that there was an abnormality and collusion between domestic gold businesses in curbing gold prices, speaking with VnExpress, a representative of a large gold business denied this but also admitted: "Now, if the price increases, the selling pressure of people will be very large, then we will lose money because we don't know where to sell the goods." This person also said that in the first few days after the Tet holiday, the price also increased sharply but the selling pressure of people was too large due to dumping a lot of goods.

In fact, at some times, when world prices increase, gold shops increase their selling prices but narrow their buying and selling margins to keep the buying price from increasing sharply. This makes it even more difficult for people who sell gold to suffer.

If the domestic gold price is cheaper than the international price, according to a representative of a gold and silver company, the demand for buying from people will be very large. "At that time, the price will automatically increase again. The price of gold is not decided by one or many businesses, but all depends on supply and demand," he said.

According to an expert, people's demand for gold is weaker than before partly due to inconsistent policies of gold businesses when buying back. Last year, SJC Company suddenly stopped buying single-letter gold bars (a series with a single letter in front) for a while.

In addition, some other gold businesses (not SJC) refused to buy SJC brand gold bars because of old or damaged packaging... or deducted a lot of money. This information immediately made people worried because the quality of gold is the same in the context that the State has stipulated that there is only one national gold bar brand, SJC.

"Buying gold is easy, but selling it requires such regulations, so people are even more hesitant," he said.

According to VNE