The Vietnam Gold Trading Association has proposed the central bank set up a gold bank, a crucial step to keep the country’s gold market in tune with the international bullion business. 

The move comes as a part of a plan for the development of the country’s gold industry to 2010, which is set to be submitted to the government by the first quarter of this year.

The gold bank would serve a support and consultancy role for the local companies running gold-related businesses.

The master plan on the country’s gold industry development is designed to help firms in outlining a roadmap to introduce new technologies and facilitate a mechanism to meet mounting demand for gold exports in the near future.

Under the plan, a gold transaction center, and a gold, silver and gemstone examination center will be set up to limit risk and stabilize market prices.

The association also proposed the central bank permit gold to be traded as a financial instrument rather than a precious metal.

The move would support the gold sector to avoid huge imports of gold for production and source funds through accounts secured by gold, according to the association.

Vietnam’s first bonded gold warehouse was open in the northern Noi Bai International Airport mid last year and run by the National Jewelry Company, an affiliate of the Vietnam Bank for Agriculture and Rural Development.

The second house is under construction in Ho Chi Minh City, to be managed by the Saigon Jewelry Company (SJC).

The time required to release gold from the storehouses is less than 24 hours, rather than three to five days as previously, making the local market much more mobile in terms of what happening globally.

More specifically, bullion traders said the storehouse is crucial to narrow the price differential between the local market and the international market.

Future outlook

Gold prices are forecast to be more volatile this year, with the average price ranging from US$660- 680 per ounce over last year’s average $608 rate.

Market analysts attributed political uncertainty in the Middle-East, the devaluation of the US dollar and the decline in greenback reserves at some central banks to an unpredictable market this year.

The rates tend to increase sharply, so changes on the world market would directly impact the local market – with Vietnam a major gold importer, averaging 50 tons annual.

Vietnam is home to around 8,000 gold trading enterprises, according to the association.