September 21, 2012 (TSR) – The State Bank of Viet Nam has authorised the Saigon Jewelry Company (SJC) to process gold bullion of other brands and put the SJC brand on them beginning yesterday, Sept 20, according to VietnamNet.
The company will also reprocess deformed gold bars of its own brand.
SJC chairman Le Hung Dung estimated the quanity of gold bullion of other brands and the deformed SJC ones currently held by credit institutions and gold trading companies at 350,000 taels, or 13 tonnes.
Dung said the company had the capacity to reprocess 53,000 taels of deformed SJC bullion without the need to assess gold quality.
To deal with the remaining quantity, the company was increasing its quality assessment capacity in terms of equipment and human resources, he said.
The Government’s Decree 24 on the management of the gold business that took effect May 25 this year stipulates that the State will have a monopoly on gold bullion manufacturing.
It tasks the central bank with organising and managing the gold bullion manufacturing process.
In July, the central bank decided to select SJC as Viet Nam’s gold brand, basing its decision on the company’s prestige and dominant market share. The company would produce the bullion as ordered by the central bank.
The turning of gold bars of other brands into SJC is expected to help increase supply, thus narrow the gap between domestic and world market prices, which has exceeded VND2 million (US$100) per tael in recent days.
A year ago, the central bank had said “if domestic prices are higher than international prices by VND400,000 ($19), it was an indication of speculative activity in the market”.
SJC to provide further 350,000 taels of gold
State Bank of Vietnam on September 19 ordered Saigon Jewelry Company to produce 350,000 taels of gold, or 13 tons of gold, from damaged SJC and non-SJC gold to increase supply in the local bullion market.
According to Nguyen Hoang Minh, deputy director of the State Bank of Vietnam-Ho Chi Minh City Branch, this amount of damaged SJC and non-SJC gold belonged to credit institutions and gold trading firms who had asked for the central bank’s permission to convert their gold into SJC gold.
With their current output capacity, SJC will provide 350,000 taels of gold shortly, said Mr. Minh. Increasing supply of gold is expected to narrow the gap between domestic and global gold prices, which was around VND2.4 million a tael on September 20.
Recently, domestic gold price was strongly affected by news and sentiment. The price of gold in Vietnam dropped below VND47 million on September 20 after the news that 350,000 taels of gold will be provided for the bullion market in the near future.
Saigon Jewelry Company, the biggest gold processer and trader in Vietnam, bought the metal at VND46.55 million, and sold at VND46.9 million as of 11.25am Vietnamese time.
Sacombank Jewelry Company bought gold at VND46.4 million and sold at VND46.75 million at 11.20am Vietnamese time.
Hanoi-based Phu Quy Jewelry Company purchased gold at VND46.6 million and sold at VND46.85 million at 10am Vietnamese time.
‘Fake’ SJC Gold bar trading
The Sai Gon Jewelry Company (SJC) has also lodged complaints with the State Bank of Viet Nam and police about a recent boom in “fake” SJC gold bars.
Gold smuggled in from other countries or not originally produced by SJC was being illegally stamped with the company’s logo and being sold in the market, the Tuoi Tre (Youth) newspaper reported yesterday, Sept 19.
The trading in fake SJC gold bars, fuelled by the government’s decision to recognise it as the sole national brand, has caused “bad impacts,” the paper quoted Le Hung Dung, chairman of the company’s management board, as saying.
The trade in one-tael fake SJC gold bars (previously the bars were of one-fifth of a tael, which is 0.24 ounces) has been found of late in Cuu Long (Mekong) Delta provinces and in HCM City.
While it is hard to discern any difference between these bars and the original with the naked eye, the quality is often lower, the Tuoi Tre report said.
It also said most gold shop owners have become vigilant and were refusing to buy bars that they suspected was not original.
Customers might be selling such gold to the banks, the report said.
It cited experts as saying smuggled gold was being used to make the fake SJC bars because of the huge difference in domestic and international gold prices, with the former higher by VND2 – 3 million (US$100 – 150) per tael.
The fake SJC gold bar is being made in other countries and brought into Viet Nam through the northern border, the report said.
“We hope police and relevant authorities will find a solution to this problem, but the most important thing is to narrow the gap between local and international gold prices,” SJC chairman Dung said.
He said the company is strengthening its gold quality testing facilities and advising customers to buy gold from prestigious shops with new packaging that cannot be faked.
They should also get a receipt with the serial number of the gold bar on it, he added.