VN's gold policy aims at market or price stabilization? The central bank’s inconsistent statements about the goals of the gold market management policy have made people feel dizzy. At first, the central bank stated that it would intervene in the gold market in order to make the domestic gold price come closer to the world’s price. Later, the watchdog agency said it did not strive to narrow the price gap, because gold was not a kind of essential goods for Vietnamese people. It affirmed that the most important purpose was to stabilize the gold price. However, in a latest statement, the State Bank said it is trying to stabilize the market, not the price. When talking about the achievements of the gold market intervention program, the State Bank stressed that the biggest achievement of the program is that the market has not been attacked by the fits of fever any more. Deputy Governor of the State Bank of Vietnam Le Minh Hung made the conclusion at the government’s press conference held on April 26, 2013. What does central bank try to stabilize? In many people’s thoughts, stabilizing gold price means forcing the domestic price down to come closer to the international price. The price gap has been widening rapidly from VND4 million per tael to VND6 million. “Stabilizing,” in the Vietnamese dictionary, means the maintaining of something in a stable state, preventing big changes during a certain period. Vietnam has been running a lot of price stabilization programs with the state’s money, including the programs to stabilize the prices of essential goods such as food and foodstuff. As such, stabilizing market means keeping the market’s performance stable, ensuring that everything goes in a normal track as usual with no shock and no fever attacks. The market stabilization, therefore, does not always mean the price stabilization, because the price is just one of the elements of a market. Experts believe that what the State Bank needs to do to stabilize the market is to ensure the stable supply which can satisfy the market demand in the competitive conditions, thus allowing setting up a reasonable price ground. However, they have noted that the policies pursued by the State Bank may lead to the supply monopoly and exterminate competition. Gold price stable at high levels The domestic price is now 4-5 million per tael higher than the world’s price, which make people believe in the downward trend of the price in the time to come, especially when the current factors do not back the recovery of the world’s price. Therefore, the people’s demand for buying gold to store at this moment is relatively low. The 16 tons of gold sold by the State Bank in the last bidding sessions by May 9 was mostly sold to commercial banks. Only a small amount was sold in the market. However, the current demand is not big enough to create the fever fits. The support threshold is believed to be VND39 million per tael, and it seems that the State Bank tries to “avoid” the threshold. When the gold price once came closer to the threshold, it bounced back immediately because of the overly high demand, even though the domestic price was still much higher than the world’s price. At that moment, people rushed to gold shops, queuing up in front of the shops for their turns to buy gold. DNSG