People keeping gold again, traders seeking fat profit

16:55' 28/04/2008 (GMT+7)
VietNamNet Bridge – The Vietnamese habit of hoarding gold in order to save money has come back, and this has been bringing new opportunities to banks and gold traders.
Higher demand for gold…
Nguyen Thi Kim Xuyen, Deputy General Director of East Asia Bank, said that injecting money in gold has again become the No 1 choice of the majority of Vietnamese people. The conclusion is proved by the nearly 50 tonnes of gold imported in the first four months of the year.
According to Huynh Trung Khanh, Senior Advisor of the World Gold Council in Vietnam, on peak trading days, the total trading gold volume may reach 500,000 taels of gold, or 19 tonnes, while the figure is 13 tonnes for Shanghai gold trading floor. The demand for gold transactions has increased by ten-fold compared to 2007 (approximately 2 tonnes a day).
In fact, keeping gold has for a long time been a habit of Vietnamese people, but caught people’s attention less when the fevers of land and stocks arose. However, nowadays, as the real estate and stock market keep falling, people have returned to their traditional habit of hoarding gold.
Experts, after considering the gold imports in the last 10 years, have estimated that the total volume of gold being kept among the public is about 500 tonnes, worth $15bil, or VND240,000bil.
…bringing fat profit to bankers and traders
It is estimated that the number of accounts opened to make transactions at the Saigon Gold Trading Floor owned by Asia Commercial Bank has doubled in the last one month, to 3,500-3,700. The everyday trading volume hovers between 200-400,000 taels and the trading value ranges from VND4-7,000bil.
According to Tran Phuong Binh, General Director of East Asia Bank (EAB), 95% of people walking onto gold trading floors are seeking business opportunities. This has prompted bankers and investors to establish several more gold trading floors with four floors to be opened in the time to come. These will be trading floors run by Sacombank; Viet A Bank; the joint venture of SJC, Ha Thanh Securities Company, SJC Securities Company and Eximbank; and the joint venture of EAB, PNJ and Intergold. Additionally, the Vietnam Gold Business Association is also planning to set up two more gold trading floors in Hanoi and HCM City this year.
Investors at the trading floors will have to pay a security deposit of only 7% of the transaction value before placing orders; therefore, the floors are expected to attract a lot of investors.
Analysts say that the profit the gold trading floor runners will get proves to be very attractive. This would be fat profit if noting that the runners can get VND4,000 of fee for every tael traded, and that there will be several hundreds of thousands of taels of gold traded every day.