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Gold traders get reprieve   2010-03-31 - Viet Nam News

The Prime Minister has extended the deadline for shutting foreign gold trading accounts to the end of June instead of tomorrow, March 31, in a move to give dealers more time to close accounts and balance their books in line with global gold prices.

International gold trading becomes profitable when there is a discrepancy between the prices on the domestic and global markets.

"This decision is just a temporary measure," a deputy director of a gold trading centre told Viet Nam News on the condition of anonymity, adding some dealers did not want to close their accounts.

International gold trading becomes profitable when there is a discrepancy between the prices on the domestic and global markets. For example; previously it was profitable to buy gold on the domestic market then sell it on the global market. But now, they have to buy on the global market and sell on the domestic market to balance their books before they close their accounts.

"Whether it is profitable or not depends on global price movement," Tran Quoc Quynh, a senior gold expert, said. "The current prices are not favourable. If dealers are forced to close their accounts right now, they may suffer big losses."

The anonymous official assumed: "On one hand, the decision may give gold dealers more time to adjust and minimise loss. On the other hand, the central bank may have more time to consider allowing banks to import gold to help them close accounts safely."

Sharing the same idea, a Ha Noi-based trader said: "To some extent, the decision is quite supportive."

None of the dealers polled by Viet Nam News revealed the number of existing foreign accounts they managed.

In the same message from the central bank, domestic gold trading floors will still have to shut down by no later than tomorrow.

With one day left, trading floor owners are hastening to shut down and say good-bye to investors.

A central bank senior official said that there was not an exact report over the issue but the value traded on the floors was quite small in comparison to previous days.

Half of the gold trading floors have already announced their closure, including Sacombank, DongA Bank, VietA Bank, Southern Bank and Eximbank-SJC while others are in the final stages. Tran Thanh Hai, director of the VGB gold trading floor said that only about 10 per cent of accounts had not been paid off.

"By the deadline, if investors still have not paid off their accounts, we will look at the situation on a case-by-case basis," Hai said.

Some gold floor managers reported that they had already informed or reminded investors to come and pay off their accounts but some had not.

Explaining the hesitation, an investor on the VGB floor said: "We also want to close our accounts and invest in securities or real estate. However, the value of the accounts is quite small so some of us do not want to have to complete closure procedures."

Five gold-trading floors, which have ostensibly switched to material gold and gold jewellery trading, still buy and sell the precious metal via gold accounts that require a 5-per-cent deposit.

But customers told Viet Nam News that fear of renewed central bank intervention had dampened their enthusiasm for the illegal products.

Several individual investors are reported to have opened accounts abroad to trade gold. Their sponsors have advertised widely in Viet Nam and, for a minimum fee of US$5,000, offered to use simple procedures to open similar accounts.

State Bank governor Nguyen Van Giau warned that his institution together with other agencies would continue to seriously check for illegal trading.

Violators would be punished according to the law and investors should be very cautious, he said.

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