Vietnamese Government Cracking Down On Gold Trading

Deciding that gold speculation is both detrimental to economic activity and a downer for the Vietnamese dong, the Vietnamese goverment is imposing a gradually-enforced ban on trading of gold bars. People who already own them will be allowed to keep them, but will only be able to sell them at outlets approved by the Vietnamese central bank.

A statement from the central bank said tough measures had been adopted because the accumulation of gold was not benefiting the economy.

Instead, it was increasing gold prices and the VND/US dollar exchange rate.

Gold prices have affected dollar prices over the past 10 years, when the demand for gold soared due to speculators buying gold to pay debts.

In addition, gold smugglers would amass US dollars to illegally import gold while dollar traders would take advantage of this opportunity to drive dollar prices higher.

Also, the prices of US dollars sold on the local market did not rise when domestic gold prices equalled world gold prices.

When domestic gold prices were far higher than world prices, US dollar prices would climb.

The central bank said tightening gold-bar trading activities and measures to stabilise the market would help change people's habits and mobilise large amounts of idle funds to serve business and production.

I'm tempted to say, "once a Communist always a Communist." Only, the Vietnamese authorities are acting like other governments that interprets a gold rise as a veiled criticism of economic policy.

I note in passing that it takes a lot of dongs to buy a loaf of bread. As of today, one greenback wiill get you almost 21,000 dongs.