Gold price rockets, gold exhausted

According to SJC in Hanoi, its gold shops in Hanoi were ‘overloaded’ yesterday afternoon, when people heard that the world’s gold price had hit the $769/oz level and the domestic level VND14.73mil/tael and rushed to buy gold.

Vu Minh Chau, the owner of Hanoi-based Bao Tin Minh Chau Gold Shop, said that his shop did not have enough gold to sell yesterday afternoon.

“The purchasing power has been rising dramatically, thus causing a serious imbalance between supply and demand,” said Mr Chau.

All gold shops have reported sharp increases in gold sales these days. SJC gold shop system in Hanoi said that every day it was selling 2-3,000 taels, or 2-3 times more than ordinary days.

While people are rushing to buy gold for fear of further increases of gold prices, professional investors are still keeping gold, not selling at this moment. Quang Dien, Director of SJC Hanoi, said that speculators were not selling gold at this moment because they hoped the domestic price would rise further to catch up with the world’s price (the domestic price is VND200,000/tael lower than the world’s level).

Bao Tin Minh Chau’s representative believes that a lot of individual investors are now thinking of borrowing money from banks to buy gold, anticipating that the gold price will rise continuously.

“They have to pay 1% per month in interest rate on bank loans, while they can pocket 5-10% for every wave of price fluctuation,” he said.

Mr Dien said that it is highly probable that the world’s price will hit the $770/oz level this week, thus raising the domestic price to VND14.8mil/tael. However, he has also warned that the gold price may unexpectedly see a downturn, and advised individual investors to sell gold now, which can ensure them fat profit already.

However, experts all lean towards the possibility of a gold price hike. Dinh Nho Bang, Chairman of the Vietnam Gold Business Association, said that the gold price may exceed the $770/oz threshold, reaching $780/oz.


Vu Minh Chau, the owner of Bao Tin Minh Chau: investors put difficulties on gold shops

What would you say about the gold market at this moment?

The highest gold price was on October 16, when bar gold was sold at VND14.73mil/tael. Purchasing power has increased by 150% over the previous week as people expect the gold price will increase further. It is quite a surprise that most clients only come to make transaction at 2-4 pm, thus making gold shops ‘overloaded’.

What can you compare about the purchasing power and the gold reserve of gold trading firms?

The gold reserve of gold trading firms proves to be too small compared to such high purchasing power. I can assure you that except big banks, no private company is capable enough to store gold at this hot moment.

The domestic price is still VND200,000/tael lower than the world’s price. Will the price gap influence the import plans?

As for jewellery gold, I can say that the supply will be enough to meet the demand without imports. Meanwhile, enterprises would incur losses if they imported bar gold at this moment.

source: http://english.vietnamnet.vn/biz/2007/10/750152/