Gold trading floors in Vietnam will be shut down in more than one month. To date, several gold trading floors have stopped operations, mainly managed by banks, and some are on the verge of dissolution. However, many floors operated by nonbank companies are seeking a way to exist.
Several gold traders have announced to introduce material gold (real gold) instead of margin gold trading after the State Bank of Vietnam declared to close all gold trading floors from March 30, 2010 and told banks to stop lending for gold investment.
An investor said although gold floor operators announced to apply material gold trading, that is the investor deposit 100 & of value for gold purchase, investors still can buy gold with only 5 & margin deposit.
When they complete the purchase, instead of taking gold, they deposit it at the company and authorize them to sell it. They will pay overnight interest rate for gold companies. After the sale is completed, investors will get the proceeds (5 & in this case) and the returns.
Some other companies sell material gold to investors in the form of futures dealing, investors only need to deposit a certain amount of cash (about 2 to 5 &) - it looks like a margin trading - but the metal is delivered in the future. When the deals are due, if investors do not have enough money to take the metal, they will be subject interest rate for their shortfall. As soon as they sell the bullion, they will pay the interest, take back the deposits and enjoy the returns.
Apart from real gold, several companies are currently trading gold jewelleries with the same method as mentioned above.
To this effect, an industry expert said the nature of this sort of material gold trading is the same as gold trading on margin account which is set to be stopped in late March. It is called material gold trading, which requires a deposit equalling 100 & trading value, as banks halted lending by the end of January as required by the State Bank of Vietnam.
In this context, gold trading companies help investors and transactions are still exercised at trading floors and via internet.
Another way for gold trading companies to be closed is to open other companies in Cambodia and branches in Ho Chi Minh City, according to experts. Investors will trade gold as previously and the only difference is the contract to be made in Vietnamese and Cambodian languages.
Investors will pay directly in Vietnam and the companies in Cambodia will advance to avoid transferring the money to the neighbouring country. Because these companies do not open in the territory of Vietnam, they will not be subject to Vietnamese laws.
According to State Bank Governor Nguyen Van Giau, after the deadline for closing gold trading floors is due, violators will be strictly punished. He said investors should be careful with this form because investors will be affected in case the companies are punished.
P.V
Vietnamese
