Gold rings sell crazy over looming bullion ban

Vietnamese people are scrambling to buy gold rings, mostly valued at 1/10th and 1/5th of a tael, in fear of a possible ban on gold bullion trading in the near future.

This recalls a time when people were rushing to trade in gold rings when there was no sales of bullion bars decades ago.

Gold rings have recently been sold for VND10,000-20,000 higher each due to rising demand.

Nguyen Cong Tuong, deputy head of gold trading department under Saigon Jewelry Co, the biggest Vietnamese gold processor and trader, told Tuoi Tre that the phenomenon has spread through many regions after his brief field survey in the central region, Central Highlands and southeastern region.

There was a trader who had contacted us to buy some hundreds of 1/10-tael gold rings, he added.

Nguyen Thi Tuyet Minh, the owner of a gold shop in Ho Chi Minh City’s District 5, told Tuoi Tre that her shop has switched to processing gold nuggets to make gold rings for sale to customers or to other gold shops in the Mekong Delta.

They are selling like hot cakes, she added.

Deputy director of a big gold trading company told Tuoi Tre that his company will produce gold nuggets with high purity of 99.99 percent to meet surging demand.

Many people are bringing gold bullion bars to gold shops to exchange for gold rings at shops in HCMC.

Nguyen Hoang Minh, deputy director of the HCMC branch of the central bank confirmed with Tuoi Tre that he knew about the situation, but refused to comment.

Gold purity in doubt

Since they are handmade by different companies with a variety of standards and Vietnam has no agencies acting as a watchdog for the gold ring sector, people should be cautious about rings with low gold purity, experts warned.

They should sell rings to the shops from which they bought them.

Since gold purity levels are varied from 95 percent to 98 percent, gold shops could not buy the rings made by other shops in fear of low purity. The sellers can also suffer losses when the shops will not buy it at the price they want, said Nguyen Cong Tuong of SJC.

Non-standardized gold nuggets’ purity levels are also questionable since there are no watchdogs while joints in gold rings are often made of low-value metal, he added.

A one-percent lower in gold purity will make sellers bear a loss of VND300,000, said a gold company deputy director.

Even original gold shops will buy the rings for VND400,000-500,000 lower than the sale price, making them rush to buy nuggets to make rings instead of selling bullions.

The low price is blamed on weight loss, impurity level or physical imperfections on rings.

For standardized gold bullion, gold shops only have to check its origin based on the information carved on its surface and weigh it, but for non-standardized gold rings, it takes more time and effort, said Nguyen Thi Cuc, deputy director of Phu Nhuan Jewelry Co.

So, they try to prevent risk by lowering the buying price, she added.

Nguyen Hoang Minh, told Tuoi Tre that the branch has urged the State Bank of Vietnam to publicize a roadmap towards banning gold trading as soon as possible so as to prevent people from scrambling to buy rings.

Tran Hoang Ngan, a member of the National Advisory Council for Financial and Monetary Policies, said since there has been no regulation so far about banning gold trade and gold storage among the people, everyone should be more careful in flocking to buy gold rings.

Prime Minister Nguyen Tan Dung at a cabinet meeting in Hanoi Tuesday ordered relevant ministries, sectors and localities to continue taking practical moves to implement the Government’s resolution on constraining inflation after initial positive outcomes were achieved. He also confirmed the government’s determination in curbing gold bullion trading on the black market in an effort to stabilize macro-economy this year.

Source: BBC

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