To whom does the gold go? TUOITRENEWS   As many as 12 tons of gold bullion have been sold through bidding sessions held by the State Bank of Vietnam over the last month, but domestic gold prices remain way higher than their global counterparts. So where did the gold go? The SBV organized the first bidding session for gold bullion on March 28 and has so far held a total of 11 sessions, selling more than 315,000 taels, but the precious metal has not become less costly as expected. Instead, the gap between local and international gold prices remains as high as VND7 million (US$337) a tael. With average prices between VND42 million and VND43.5 million, the sold out gold bullion was estimated at VND1.5 trillion, equal to the registered capital of a small commercial bank. “More than 90 percent of the gold was bought by banks who wanted to make up for the gold deposits that they have exchanged for Vietnamese dong,” said the director of a bank in Ho Chi Minh City. Banks will have to completely settle all gold bullion deposits with customers by June 30, and they need the yellow metal to pay back depositors, elaborated Nguyen Thanh Truc, chairman of Agribank Jewelry Co. (AJC). “Hence, even though the central bank has sold a large number of gold bullion, the metal has failed to flow into the economy but lies in the gold reserves of banks instead,” he said. “Consequently, the gold supply does not increase, and prices thus fail to go down,” he explained. It was reported that banks need as many as 20 tons of gold bullion in order to settle deposits, so the credit institutions will continue to buy around 8 tons in the next bidding sessions. “After the June 30 mark, the central bank may switch to focus on stabilizing the gold market rather than helping banks to balance their deposits,” Truc commented. 20 tons or more? The central bank has never released the official amount of gold bullion banks have to buy to pay back their depositors, but figures from the credit institutions show that the number could be larger than 20 tons. A few years ago, under pressure of cash liquidity, many banks had to sell parts of their gold deposit in exchange for Vietnamese dong, or use the metal as collateral for interbank loans, a move that was allowed by the Central Bank at that time. “But as the gold market policy changed, these banks now have to bear bitter fruit,” commented a bank CEO in the city. According to the HCMC branch of the Central Bank, the total capital in gold of all banks in the city is more than 1.6 million taels. Some 664,770 taels, or 25 tons of these are gold deposits, and around 24.7 tons are kept in gold-custody service. All of these must be cleared by June 30. Gold closed Wednesday's session at VND42.22 million a tael, some VND6.32 million a tael costlier than the global price.