What will be the consequences of the continuous domestic gold price compared to the world?

According to many experts, the domestic gold price has had a difference with the world price many years ago, this difference is usually not more than 10% if converted at the bank rate. However, within the past 1 year, the domestic gold price is usually 10-15% higher than the world price.

For example, last March 8, SJC gold price traded at 74.4 million dong per tael, while the world gold price traded around 1,987 USD/ounce, converted at the exchange rate equivalent to 55.03 million dong/tael. Thus, domestic gold was 19.37 million dong higher than the world price per tael. This is an unprecedented difference.

Currently, although the “heat” has been reduced, the price of precious metals in Vietnam is still higher than the world by more than 18 million dong/tael.

Recognizing this situation, many experts assert that if it continues for a long time, it will cause many consequences.

According to economist Le Dang Doanh, the high difference between the domestic and international gold prices can easily lead to the risk of gold smuggling because gold is bringing in too much profit. Previously, when this difference was at 4 million VND/tael, the situation of gold smuggling was complicated. Currently, domestic gold is too expensive compared to world gold, making many people more impatient.

In addition, such a high difference easily pushes the gold market to develop erroneously, not showing the true value and in line with the general trend in the world. Expensive domestic gold can also cause people to focus on buying gold, making it a large source of capital “laying dormant”, difficult to mobilize for investment and production development.

However, Mr. Doanh also said that the current record level of gold price in the country does not affect the economy as much as in previous years. Because in the past, when the domestic gold price was higher than the world price, it meant that the buying power of gold in the market increased, many people withdrew their savings to buy massively. Now it’s completely different, people’s demand for gold is only low or medium.

Another consequence of the high domestic gold price and the “terrible” difference with the world price is that it will push risks to investors, making it difficult for those who have real needs to buy and those who buy for investment. it’s easy to lose.

Therefore, economist Dinh Trong Thinh said that domestic investors should not buy gold when the difference between domestic and international gold prices is too high. If “picking up” gold, buyers have to pay a price nearly 19 million dong more expensive than the world price and will face great risk if the market reverses.

“Therefore, you should only buy gold in small amounts when you really need it, and buying for a long-term investment is not the right time. Only buy when the price difference between the two markets is at a reasonable level of about 2-3 million VND/tael“, Mr. Thinh said.

Besides, Mr. Thinh said that the “hot” increase of the domestic gold price is not sustainable, the price will increase or decrease, so in the short term buying gold at this time will contain many risks.

“Investing in gold is a safe channel, but it is also quite risky because the price of this precious metal has fluctuated very strongly and is at the top. Therefore, people should not speculate, especially do not borrow money to invest in gold during this period. People are also cautious when focusing on investing in gold bars because with limited supply, if the market only targets this type of gold, the price will be pushed up.“, Mr. Thinh added.

Why is domestic gold skyrocketing?

According to experts, the main reason for this fact is that Vietnam’s gold market is not connected to the world. In Vietnam, only the State Bank (SBV) has the right to import gold and then distribute it to the market. Therefore, the supply is not abundant and pushes the price of this item up.

Le Dang Doanh also analyzed that the main reason why domestic gold is so expensive compared to the world price is due to limited supply, people have the need to buy to store and keep capital safely instead of trading. sold for fear of inflation and other impacts.

“From 2012 until now, according to Decree 24/ND-CP, the State Bank does not allow the import of raw gold to produce SJC gold, so the supply is less. This is to control gold imports, to avoid “goldenization” in the economy. Mr. Doanh said.

Also according to Mr. Doanh, “The gold price is higher than the world record, showing that we have a “separate gold market” rather than a common market in the world.“.

Meanwhile, economic expert Dinh Trong Thinh said that in Vietnam, the demand for gold is very large, because the nature of Vietnamese people is thrifty, but if you want to save safely, buy gold to store to ensure stability. assets, so the demand for gold is high, while the supply is low.

According to Mr. Thinh, if people buy gold rings, gold only, the difference is close to the world gold price or only a few million dong/tael, while buying gold bars and SJC gold, the difference is high, because gold bars currently Vietnam does not produce, especially the national gold brand SJC.

“Because of the scarcity and high demand of the people, it is natural that businesses and gold shops will raise the selling price“, Mr. Thinh said.

(According to VTC News)

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