Cbank’s gold bullion bidding a failure: insiders TUOITRENEWS   The first gold bullion bidden conducted by the State Bank of Vietnam on Thursday was not as successful as it had expected, with price settled at a high rate while gold traders blasted that the bidding only exacerbated the market instability. Only 2,000 tael out of the 26,000 taels of gold bullion was sold during the bidding on March 28, the first official session under the bid of the central bank to intervene and stabilize the gold trading market. The gold was sold at VND43.81 billion (roughly US$2,100) a tael to two winners out of the 21 credit institutions and gold firms registered. The selling price was also the floor price set by the central bank, and was as much as VND400,000 a tael higher than the quoted price of Saigon Jewelry Co at that time. It also contributed to widen the gap between local and global prices to some VND4 million a tael. The bidding thus not only failed to pull down domestic gold prices, but also created doubt in insiders over the main aim of the bidding, which is to stabilize the market. “So what is the real purpose of the central bank’s gold bidding?” gold traders questioned after the bidding session was over. “This debut proves that if the central bank, which is seemingly not knowledgeable about the gold market, continues to intervene and manage it, things will get worse,” commented Pham Do Chi, former financial expert at the International Monetary Fund. “In case the global gold market fluctuates, the central bank will take high risk with its 24,000 unsold gold bars,” added Chi, who holds a Ph.D. Earlier the central bank said the gap between local and international gold prices should only stand at some VND400,000 a tael. “But now they set the bidding price at even higher than the market price, so the central bank just contradicted itself,” Chi said. Incomprehensible message Most gold traders deemed the first bidding as a big failure, and Dr. Chi said there is a reason for this. There are no banks in the world that monopolize gold importing, processing, and trading like the central bank, he said. “This multifunction has raised question over the central bank’s ability to evaluate the market,” he added. The central bank should focus on its larger tasks like solving bad debts or restructuring the banking system, rather than trading gold bullion. “With the central bank failing to follow the gold market development, the public is wondering if the target of stabilizing the market could be achieved,” he said. “No one understands the message the central bank is giving.” Tightened rule Meanwhile, the SBV has recently stipulated that credit institutions strictly abide by the regulations for managing gold trading. Specifically, credit institutions are not allowed to convert gold deposits into Vietnamese dong or other forms of currency, nor can they use gold deposits for mortgages, collateral or security for the payment of loans from other credit institutions. They are also not permitted to loan their customers money to buy gold unless they receive permission from the SBV governor. Credit institutions must take back loans in gold or convert the outstanding loan into Vietnamese dong, and they cannot extend loans originally transacted in gold. The SBV also asked credit institutions to strictly obey the regulations on managing assets, including keeping and storing gold for customers, and they must publish their fees for storing gold deposits. They should pay no interest, fees or any type of return to the gold depositors, while the depositors should be required to pay fees for the institution to store their gold.