Fake Gold Creating Concern In Vietnam Gold Market

Recently, some goldsmith shops in Vietnam got a solicitation to buy bars coming from Hong Kong. Instead of being pure gold, they were about 60-75% gold with the remainder being a fine powder that examiners suspect is wolframite (tungsten.)

The information has immediate caused big worries among Vietnamese people, who have the habit of keeping gold as their assets in the context of high inflation, but they do not know for sure if the gold in their coffers are real gold or imitation gold. The problem is that the imitation gold cannot be discovered with modern machines....

The information about imitation gold has immediately made the domestic bullion gold market “fall into a crisis” as said by Nguyen Minh Chau, General Director of Bao Tin Minh Chau Gold, Silver and Gemstone Company.

“The bullion gold trade turnover of goldsmith companies has decreased by 50 percent. Especially, many companies have seen the turnover drop by 60-70 percent and they are at the risk of having shut down business,” Chau said.

He went on to say that the gold business has fallen into crisis because of the people’s psychology.

Oddly, the news story that reports on this disturbing development tries to put a happy face on the discovery and subsequent buying strike by saying it will help bring down inflation! The author, or a government censor, holds the unusual idea that a rise in gold causes inflation rather than revealing inflation. It's as if they believed that a rise in the mercury in a thermometer caused the weather to get hotter.

Regarding the tungsten: the crooks behind that scam are dangerously sophisticated. A normal con artist would plate gold over tungsten in order to maximize the theft, short-term. That kind of fraud can be detected with a touchstone.

Unfortunately, hollowing out only the centre and stuffing tungsten inside is much harder to detect. With that kind of sophisticated scam, the only recourses might be either sawing the bar open and/or melting it. Tungsten's melting point is much higher than gold's.

As a result of such scams, assaying costs to confirm good delivery on bars might well shoot up. Fortunately, there are other techniques available - looking for: soldered bars, bars that are mocked up to look like standard bars but aren't, bars with irregularities that indicate being sawed open and remelted. Sad to say, if the tungsten scam spreads it'll be harder to sell non-standard bars.


The remedy might be buying legal-tender bullion coins instead of high-weight bars. They're hard to counterfeit, and government mints may co-operate by making them even harder to fake. Bar smelters could help out too, by lining their bars with hard-to-duplicate riffings along the edges - something like the ribbing on coins. If such comes to pass, sad to say, the newer bars will go for a premium relative to older and less secure bars.

Alternative To Gold Ban Floated In Vietnam

Recently, there's been a crackdown on gold and U.S. dollar trading in Vietnam. Perhaps out of concern that the original measure is too punitive, economist Vu Dinh Anh believes that a central exchange should be set up instead so as to control sales of and lending in gold rather than banning the gold trade outright.

The expert cited the statistics as saying “that 45 percent of money saved by Vietnamese people, especially the local residents in rural areas, is in gold. Only 24 percent of monies have been deposited in banks, while the remaining proportion has been injected in foreign currencies and real estate.”

Experts all agree that it is necessary to tighten the control over the bar gold market, but it is not advisable to prohibit bar gold trading.

Nguyen Thanh Truc, Chair and General Director of Agribank’s Jewellery Company also thinks that it is very difficult to prohibit the trading of the special kind of commodity, saying that “if the government tries to eliminate the market, another market, a black market, will take shape.”...

Total hoards of gold owned by Vietnamese has been estimated by the World Gold Council at 500 tonnes, with a value of 22 billion U.S. dollars. Another estimate says the figure could be as high as 1000 tonnes.


That's a lot of gold, whcih speaks to a large market for the stuff. From my outside perspective, going easy on such a big market would be prudent.

Vietnamese Government Crackdown On Greenback Trading Heats Up

For a ban that was supposed to be introduced gradually to get people used to it, the Vietnamese government has been pretty rigourous in enforcing it. As reported by Phammuoi Nguyen in the Wall Stret Journal's Market Beat blog, the Vietnamese government hauled away four U.S. dollar traders in a well-publicized sting. They were ready to trade $400,000 for 8.5 billion dong. Gold traders took the arrests as a thinly-disguised lean on them: gold prices fell after the arrests were publicized.

“More players are switching savings from dollars and gold into the dong funds after police forces have announced that they will arrest anyone who trades dollars outside the banking system, and will confiscate those dollars. The move has brought great benefits to the stock market,” a Vietcombank Securities trader.

If y'all don't mind me saying so, the move has brought real similarites to the United States War on Drugs. Welcome, Vietnam, to the "War on Dollars."

Vietnamese Dong Gets Boost From Controls

Following up on yesterday's announcement of a coming ban on gold trading, the Vietnamese government has ordered firms to dump U.S. dollars on the market. The dong got a boost from greenbacks being sold as a result of the new controls being put in place.

Vietnam’s dong strengthened at banks and money changers after the central bank said dollar supply increased following an order for companies to sell more of the U.S. currency back to lenders.

Both the dollar sales and gold controls are designed to address the fall of the dong and to divert economic activity from what the authorities consider to be unproductive speculation.

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.