🪙 The little gold (cậu Vàng) reaches its peak: when the world price drops by 7%, domestic prices remain solid as a rock. When the world price rises again, Vietnamese gold jumps to 123 million VND per tael.
🌍 The world gold price has dropped from 3500 dollars to 3250 dollars per ounce last week.
- This translates to a decrease of about 7.14%
- However, the SJC gold price in Vietnam remains around 118 - 120 million VND per tael.
- Not much has changed despite the strong drop in the world market.
💰 Why is that?
- Because the difference is not due to gold prices, but due to taxes, fees, and buyer sentiment.
- Gold imported to Vietnam is subject to various fees: import tax, inspection fees, insurance...
- With the exchange rate of 26,500 VND/USD, the world spot gold price is equivalent to 104 million VND per tael. But the actual selling price is 120 million.
- This means buyers are having to pay nearly 16 million VND per tael more, not because gold prices have increased, but because of excessively high fixed costs.
- If there were a gold exchange or gold ETF, then reducing this price difference could be possible.
📈 The trust fee for the SJC brand keeps its price high.
- SJC is the national gold bar brand. Everyone trusts and prefers it.
- Strong demand - Limited supply
- Gold in Vietnam is not only for investment but also for wedding gifts, presents, jewelry...
🔐 The import of gold is strictly controlled.
- The State Bank does not want to allow free trading of gold bars, to avoid dollarization and the gold standard in the economy.
- Because Vietnam has to import gold for sale, it will cause dollars to flow out of the country, affecting the exchange rate.
- But the more they prohibit, the more people want to buy: Limited supply, strong demand, prices are hard to decrease.
⚖ Political instability has not decreased, pushing gold prices up. It is forecasted to continue rising.
- Central banks have not stopped their buying spree, expected to buy 70 to 80 tons each month to diversify foreign exchange reserves.
- In 2024, the State Bank of Vietnam will sell more than 13 tons to stabilize domestic sentiment at a price around 90 million VND per tael.
📌 In summary
- Domestic demand is high
- Supply is limited
- Expectations for gold prices amidst political instability will keep the fat little gold (cậu Vàng) overweight, making it difficult to decrease immediately.