Vietnam‘s gold price at new all-time high

2011-JUL-26

Vietnam‘s gold price traded at a new all-time high of 39.6 million dong ($1,931) per tael (1.21 ounces) last week; the country’s inflation rate hit 22.16% in June, and more and more Vietnamese people are buying gold and silver in an effort to protect their savings from currency depreciation. Given the continuing strength in the global gold market owing to sovereign debt problems around the developed world, higher dong prices for the metal seem inevitable.

Investors around the world are growing increasingly concerned that politicians in Washington may not reach an agreement to raise the US debt ceiling before the US Treasury runs out of money to pay for its existing commitments on August 2. In addition, the ratings agency Moody’s Investors Service downgraded Greek sovereign debts by another three notches to Ca yesterday morning, noting that default was almost unavoidable.

Both gold and silver will likely continue to appreciate as long as developed nations don’t take the hard choices necessary to address their debt problems. Vu Minh Chau, head of the major Vietnamese gold trading firm Bao Tin Minh Chau, told the online edition of the Vietnamese newspaper Thanh Nien Daily that the domestic gold price had the potential to climb to levels beyond 40 million dong-per-tael. Financial institutions in Vietnam are stocking up on gold, in anticipation of increased demand from the public.

Vietnam‘s General Department of Customs has published a report that states that the country exported 30 tonnes of gold from the beginning of the year to the middle of July, most of it in the form of gold jewellery. At present, Vietnam’s domestic gold price is trading at a $10 per tael discount to the world (i.e., US dollar) price. The country’s communist government has recently taken measures aimed at curbing the export of gold, such as the introduction of a 10% export tax on gold jewellery with a purity of 99% or higher.