Many investors are getting their gold out and buying into other asset classes as the interest banks pay on gold deposits has slumped to 0.1 percent.
A general manager of a bank with a large amount of gold deposits said deposits decreased by 15 percent, or 16,000-20,000 taels, in the last two months. A tael equals 37.5 grammes.
He blamed it on the fall in deposit interest rates, adding they convert the gold into dong or US dollars to get higher interest rates.
A manager who handles gold at a bank in Ho Chi Minh City ’s District 1 said deposits fell by 30,000 taels in a short period of time. They used to be 400,000 – 500,000 taels at one time, he said.
He said most people who kept their gold in banks and waited for prices to rise have now decided to sell out and shift their money to other asset classes, especially when the price skyrocketed.
A deputy general manager of a bank admitted that his bank itself expects depositors to withdraw their gold since there is not much demand from borrowers, explaining most are traders. But gold floors have closed now and the State Bank of Vietnam does not encourage commercial banks to lend for gold trading, while commercial banks are not allowed to have gold trading on accounts.
Also as a result, interest rates on both gold loans and deposits have fallen.
A banker estimates gold deposits at banks have fallen from 100 tonnes to 70-80 tonnes after the central bank began to curtail gold loans at the beginning of May.
People are investing in property, securities, or foreign currencies.
Nguyen Thi Cuc, deputy general manager of PNJ, a huge jewellery company, said few individuals transact gold: most transactions were between jewellery companies and gold shops.
Her company had been buying up gold for jewellery since gold prices in the country have been 300,000 VND - 800,000 VND lower than global prices over a period of time.
A general manager of a jewellery company owned by a bank said his company exported 3.5 tonnes of the metal in May.
Phu Nhuan Jewelry Joint Stock Company, whose exports were worth only 16 million USD in the whole of last year, has exported 20 million USD worth in just the first five months this year.
Vietnam ’s total exports have topped 900 million USD this year and 2.7 billion USD in the last three years.
An analyst said there was still a lot of gold owned by individuals which would gradually be sold./.
