Gold in demand in Vietnam: WGC

16:40' 11/07/2007 (GMT+7)

VietNamNet Bridge – Albert Cheng, Managing Director in charge of Asia of the World Gold Council, in an interview given to Thuong mai newspaper, said that together with India and China, Vietnam was the market with the greatest potential in Asia. VietNamNet Bridge briefs the conversation between Mr Cheng and Thuong mai’s reporter. How do you assess Vietnam’s gold market? In terms of jewellery gold, the demand is not high in Vietnam and even lower than in many other places in the world. However, the demand for bar gold in the country is very high, second just after India. It is because in recent years, Vietnam’s economy has been developing rapidly, which has stimulated the demand for ingot gold consumption. In 2006 alone, Vietnam imported more than 70 tonnes of gold. Now Vietnam, India and China are the markets in Asia with the highest growth rates. What do you think are the reasons behind the constant gold price increases in the last four or five years? The gold price keeps rising because the supply cannot meet the demand, which is increasing rapidly, because the Asian economies are performing well, especially the markets I mentioned above. Meanwhile, the gold reserves in the world have diminished, and the difficulties in gold exploration make supplies short, not enough to meet the demand. Therefore, the gold price will see further increases in 2007 and 2008. You have said that the gold price would increase further. Why do you still say that it is most profitable and safest to make investment in gold? Gold is one of the best investment channels. Let me make a comparison with two other investment channels, securities and real estate. While you can buy gold with small sums of money, you can’t do that with real estate. You must have a certain amount of money to buy a house. Meanwhile, the liquidity of real properties is not as high as gold, and the real estate market is sometimes too hot, sometimes frozen. If you inject money in securities, you should have good understanding about the companies you are going to make investment in. With securities investment, you can either get fat profit or become penniless if the market falls down. Many people feel safe making deposits at banks. However, if the consumer price index (CPI) grows high, the real profit you can pocket is small. How would you comment about the fact that the central bank has allowed the operation of two gold bonded warehouses? It is a good decision and it will not harm Vietnam’s gold market. It will benefit consumers and banks. Though the gold in the bonded warehouses still belongs to foreign banks, it will take less time to import gold when Vietnam’s banks want it (12 hours instead of 48-72 hours as previously, when gold must be shipped from abroad). Consumers will be able to buy gold at the most reasonable prices and in the shortest time. The gold price unexpectedly increased sharply on July 9. The dollar devaluation and higher crude oil price both have pushed the gold price up. At the opening of the July 9 trading session, gold with spot delivery was traded at $654/oz, while the price soared to $660.5/oz in the afternoon of the same day. The deals for August deliveries were inked at $662.5/oz, the highest peak in the last three weeks. The price slightly decreased on July 10 to $660.3/oz, but stayed firm at high levels. The greenback value slightly decreased, with one dollar equivalent to Yen123.42. One euro is now equivalent to $1.3628, while one pound, $2.0147. Crude oil is being traded at over $72/barrel. On the domestic market, SJC bar gold has increased by VND50,000/tael, selling at VND12,890,000 and VND12,920,000 per tael in Hanoi and HCM City, respectively. (Source: Thuong mai, KT&DT Viet Nam Net)