VietNamNet Bridge – The gap between the domestic and international gold prices got wider after the Decree No. 24 took effect some days ago.

Dr. Nguyen Duc Thanh, Director of the Economics and Research Center, an arm of the Hanoi National University, said the price gap widening shows the powerlessness of the policy on the gold market management and raises questions about the economic groups’ interests.

“It’s clear that the State Bank strives to take away the gold’s power as a kind of currency and ease the “goldenization” in the national economy. However, I feel worried about the management tools the State Bank uses to obtain that goal,” Thanh said.

“In such conditions of the market, which still lacks the transparency, people have doubts that the monopoly in the market aims to serve some economic groups’ interests. Meanwhile, the widened gap between the domestic and international prices shows the powerlessness of the policies,” he added.

Talking about the new policy on the gold market management, Governor of the State Bank--Nguyen Van Binh, said before the National Assembly some months ago that the State Bank does not intend to let the domestic gold price communicate with the world’s price, because this would help the gold speculation return.

However, economists have pointed out that it is the big gap between the domestic and the international prices which serve as the fertile land for the speculation.

Dr. Nguyen Minh Phong, a well-known economist, has also warned that the imposition of the State Bank’s will on the gold market would bring the reverse effects. This may not help ease the goldenization in the national economy as the central bank expects, but would turn gold into the second currency to exist in Vietnam. If so, this would cause serious macroeconomic uncertainties.

A big problem exists that after the Decree No. 24 took effects, the gap between the domestic and the world’s prices got widened, sometimes reaching VND5 million per tael. It is still unclear whose pockets the money generated by the gap has gone to, but it’s clear that people have suffered loss from this.

“When the local currency is weak and its value is unstable, people would try to keep gold instead of dong to protect their assets’ value. The overly high gap between the domestic and international prices would make the macro economy uncertain,” said Dr Ngo Tri Long, a well-known economist.

This explains why the government, in the resolutions released in 2012 and early 2013 many times asked the State Bank to take necessary measures to force the domestic prices down to make it come closer to the world’s market price.

Under the Instruction No. 01 which has been released by the State Bank, five groups of policies to stabilize the gold market would be implemented to tighten the management over the market which would help narrow the price gap.

However, experts have pointed out that once the monopoly exists and the current import-export mechanism does not change, the gap prices would still exist or get even more serious.

The director of a gold company said that the gold monopoly does not exist in any other countries except Vietnam. In the countries, at least 3-4 gold brands co-exist to ensure the healthy operation of the market.

“It is unreasonable to see SJC gold much more expensive than the gold with other brands, though they have the same gold purification,” he said.

Compiled by Thu Uyen