At least Vietnam admits rigging gold as currency intervention

Gold Falls in Vietnam After Central Bank Orders Sales

From Reuters
via Alibaba.com, Hangzhou, China
Friday, February 5, 2010

http://news.alibaba.com/article/detail/metalworking/100245611-1-update-2...

HANOI, Vietnam -- The price of gold in Vietnam dropped by more than 5 percent on Friday from the day before after the central bank told the country's biggest maker of gold bars to sell bullion to help narrow the gap with world prices.

Saigon Jewelry Co. (SJC) sold 28,000 taels of gold (33,880 ounces) on Friday compared with 10,000 taels on Thursday, a company official said by telephone from Ho Chi Minh City.

"The state bank has asked SJC to sell gold so that prices can be stabilised in line with the world market," said the official, who declined to be identified.

Gold was quoted at around 24.9/25 million dong ($1,353.60/$1,359) per tael at around 1000 GMT, about 5.4 percent lower than the 26.37/26.43 million dong quoted late on Thursday, according to SJC's website (www.sjc.com.vn).

Gold prices in Vietnam have been higher than world prices because imports are controlled and taxed, and sellers charge a premium for the commodity, which is widely used as a second currency and reserve of wealth.

On Friday afternoon, after the price fell, gold in Vietnam was still higher than world prices by about $63 per ounce, or 6 percent.

A central bank statement later confirmed that it ordered SJC to sell gold and said it would "apply necessary supportive measures" during the process of stabilising gold prices. It did not give further details.

On the world market, gold prices hovered above three-month lows on Friday, a day after after posting their biggest one-day loss since 2008, with investors wary of taking risks amid mounting sovereign debt fears in Europe.

The amount of gold SJC sold on Friday was relatively large. By comparison, on slow trading days it sells 4,000-5,000 taels, the official said. When gold prices soared to around 29 million dong per tael, in early November, SJC was also ordered to sell bars and it offloaded 16,000 taels per day, he said.

He did not say how long the firm would sell at high volumes.

The nation is preparing for the Lunar New Year, or Tet, its biggest festival of the year. The government has committed to keeping prices stable and currency flowing during the period when there is traditionally a surge in consumption.

The central bank's decision also follows government orders to close all of the country's roughly 20 gold floors, which deal in non-physical gold and allow margin trading, and overseas trading accounts.

Vietnam's currency, the dong, is closely linked to the gold market. When gold prices soared in November, for instance, the dong sank on the black market because gold smugglers were buying dollars to take across borders to purchase new gold. (1 tael = 1.21 troy oz; $1 = 18,469 dong)

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