Should the central bank decide to import gold? The question is an urgent one as credit institutions will not be allowed to mobilise gold after November 25, the deadline set by Government Circular 12/2012/TT-NHNN.
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Scarcity of the precious metal is to blame for the price rise, as banks have bought large volumes of gold bullion to ensure gold liquidity before the November 25 deadline.
Last year, to stabilise the market, five banks were allowed to mobilise gold from the public and sell gold bullion at fixed prices set by the State Bank.
As a result, the banks sold a large volume of gold deposited by customers at very low prices and under the form of gold certificates.
Because of these sales, banks are now in the position of having to buy gold to pay back their customers.
To ease gold scarcity on the market, the central bank this year has twice allowed the recasting of a total of 350,000 taels of damaged SJC gold bars and non-SJC bars.
Earlier this year, the central bank decided that it would be the only producer of gold bullion, and chose SJC to be the national brand. But, after banks and gold traders filed petitions, the central bank gave the green light to recast non-SJC gold bullions.
The new supply is insufficient as demand, particularly from commercial banks, is still very high. As late as last week, gold prices were more than VND47 million per tael.
To solve the scarcity problem, experts have suggested that the central bank should directly import gold to help the commercial banks' gold liquidity.
And, to ensure the stability of the exchange rate if gold were imported, the volume of imports should be no more than 20 tonnes, they said. In addition, commercial banks should use their foreign currency to import the gold.
However, problems could still exist in the market. In the past, for example, when the difference between domestic and global gold prices widened, the central bank often loosened gold imports in an aim to stabilise the market.
As a result, the market pressure eased, but only for a short time, while the price gap between domestic and global markets remained large, sometimes even reaching VND2 million per tael.
Worse still, as information about gold imports was released, the forex rate usually rose because of speculation.
The situation could be the same this year. If the central bank decides to import gold, then the forex rate could begin to fluctuate immediately.
In recent years, the gold supply was not always enough to meet demand, even after Vietnam spent a large amount of foreign currency to import a fairly large volume of gold.
So, the question remains, how much is enough?
The central bank should extend the circular's deadline for gold lending and mobilisation at a number of commercial banks that are now facing a liquidity shortage, and then closely supervise their operations. This would reduce pressure on the market.
It is estimated that the public privately holds 300-500 tonnes of gold. If this gold volume were mobilised by banks, the commercial banks' gold liquidity problem would be eliminated.