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MUMBAI (MINEWEB) - As central banks expand their bullion reserve and gold tradersready for a bull run, Vietnam has been turning to gold as a safehaven. With record high inflation, Vietnam is looking to mobilisethe large hoard of gold amongst its people, most of who have beenusing the precious metal as an unofficial currency. The Vietnamese people have been buying gold in order to preservethe purchasing power. Aiming to mobilise this gold, the country'scentral bank is in the midst of issuing gold certificates. Theregion is said to be hoarding upwards of 1,000 tonnes of gold wortharound $45 billion, second only to India. Global research firm Macquarie had reported that Indian householdshold 18,000 tonnes of gold which represents 11% of the global stockand worth over $950 billion. In Vietnam, Cao Sy Kiem, Member of the National Advisory Councilfor Financial and Monetary Policies told a local newspaper that thegovernment was keen to mobilise gold from local residents. In orderto do this, Kiem said the government must have transparentpolicies, an efficient system to mobilise gold, and regularinformation, supervision and inspection schemes. He said local people should be allowed to pledge, trade or exchangegold certificates in the domestic market while the government coulduse the mobilised gold to serve businesses' production and tointervene in the market whenever required. Kiem suggested that Vietnam should also increase its gold reservesand just not rely on the restrictions placed on the bullion marketat the end of 2011, when Vietnam adopted a new law aimed atstabilising its gold market. Vietnam's gold and forex reserves rose sharply in February thisyear, after the country's central bank adopted a series of measureswith regards to the gold sector. In a statement, the central banksaid foreign exchange reserves at the end of February 2012 were up20% from the end of 2011, but gave no indication on gold reserves. According to available data, Vietnam's gold reserve is estimated tobe near 500 tonnes. In the recent World Gold Council report whereglobal demand for gold bars and coins in Q1 2012 stood at 260.0tonnes, and 51.3 tonnes respectively, 18% lower than the previousquarter, Vietnam was the region's strongest performing markets,where volume of investment grew 41% year on year. Though investment demand in India was down 46% from a year ago,Chinese figures also jumped 13% year on year to reach a quarterlyrecord of 98.6 tonnes. The country's central bank, the State Bank of Vietnam also hastaken on the onus to check hoarding and speculation, and minimisethe influence of the gold market on monetary policy. It willinitiate seven measures to closely monitor the gold market whilestill ensuring people's rights to keep and trade in bullion. The country continues to increase gold market controls. In April,the State Bank of Vietnam issued a decree to restrict trade inbullion to stabilise the gold market. Since gold prices varygreatly between the domestic and global markets, it causes severehardship for authorised agencies to regulate the exchange rate andimplement monetary policies. Though the apex bank had forced credit institutions to ceaselending and mobilising gold by May 1, last week it decided toextend the termination date for gold mobilisation and lending‘til November 25. The apex bank also is keeping tabs on trading and has asked thejoint stock commercial banks, namely the Asia Joint StockCommercial Bank, the East Asia Joint Stock Commercial Bank, theExport and Import Joint Stock Commercial Bank, the VietnamTechnological Joint Stock Commercial Bank and the Sai Gon JewelleryCompany Limited to report their networks of gold bar trading. Marketmen said the strict controls had ensured that high goldprices continued to prevail on the black market. Recently, thecountry's banks raised the interest on gold deposits. Analysts havetaken this as evidence that the central bank is trying to controlthe gold circulating in Vietnam through commercial banks. Vietnam continues to be Switzerland's single largest market forimported gold products since 2009. SUBSCRIBE to Mineweb.com's free daily newsletter now. The e-commerce company in China offers quality products such as Ladies Neck Scarves , Personalized Handkerchief, and more. For more , please visit Personalized Pillow Cases today!
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