The State Bank of Vietnam (SBV) on May 17 announced its decision to audit the gold trading activities of credit institutions and enterprises over the past four years. 

Locals buying gold at a jewelry store in Hanoi. Photo: Thanh Hai/The Hanoi Times

The audit will comply with gold trading laws, anti-money laundering measures, accounting practices, invoicing and documentation, and tax obligations. The audit will last for 45 days and will cover the period from early 2020 to May 15, 2024. "If necessary, the audit may also include periods before or after this timeframe," the SBV noted.

The audit team will include representatives from the Government Inspectorate, the Ministry of Public Security, the Ministry of Finance, and the Ministry of Industry and Trade.

Earlier this week, Deputy Prime Minister Le Minh Khai also instructed the Ministry of Public Security and the Government Inspectorate to join the multi-disciplinary team auditing the gold market.

In a recently released report, experts from the Vietnam Institute for Economic and Policy Research (VEPR) and Think Future Consultancy suggested that administrative measures, such as market audits, mandatory electronic invoicing, and investigations into price manipulation, would have an immediate stabilizing effect on the gold market.

These measures are seen as more effective than importing large quantities of gold to stabilize prices. The audit comes amid rising gold prices and a widening gap between domestic and international prices, despite regulatory efforts to increase supply through auctions. Last weekend, SJC gold bars hit a record high of VND92 million (US$3,615) per tael.

Following regulatory interventions, SJC gold prices have cooled and dropped to around VND90 million ($3,536), but the price gap with international markets remains high at about VND17 million ($668) per tael.

Regulators assert that gold is not a regulated commodity, meaning the government does not intervene, protect, or control its price. The SBV only holds a monopoly on the production of gold bars, not on its trading.

However, bullion is a unique product with both commodity and monetary characteristics. The demand for buying, selling, and exchanging gold bars among the public is legitimate. Therefore, the SBV has the responsibility to intervene and stabilize the market and create a level playing field for all participants. It also warns that violations such as speculation and market manipulation will be dealt with strictly.

The SBV has intervened to stabilize the gold market through gold bar auctions to increase supply. Since April 19, the State Bank has held seven SJC gold bar auctions, with a total successful bid volume of 27,200 taels (approximately 1.02 tons).

Next week, the SBV will continue with two more gold bar auctions on May 21 and 23. Additionally, the bank will work with relevant sectors to implement comprehensive solutions to resolve the high price gap between domestic and international gold bars. People are advised to be cautious when trading gold in order to minimize risks.

In the long term, it has been proposed that authorities should amend Decree 24/2012 to eliminate the SJC's monopoly on the gold bar brand and manage gold bars as 9999 quality gold. In the meantime, gold jewelry should be considered an ordinary commodity.