Gold speculation is dangerous, expert

Ngo Tri Long, Deputy Director of the Institute for Market and Price Research (IMPR)

The global price is predicted to continue its volatility, leading to the erratic behaviors of the domestic price. Many economic experts have given their views about the current gold fever.

Mr. Ngo Tri Long, Deputy Director of the Institute for Market and Price Research (IMPR)

Gold speculation is dangerous at this moment.

Skyrocketing global gold price recently has pushed up the domestic price.

Unstable political situations and a possible war between the US and Iran are main factors contribute to the increase in oil price and the reduce in dollar value. And at this very moment, many investors in the world rush to buy gold, leading to the skyrocket of gold price.

It is not surprising that gold price in Viet Nam goes up, following the global trend. But the exorbitant gold price in recent days is an abnormal phenomenon. It is extremely dangerous as thousands of people rush into gold speculation, surely leading to the inflated price.

Personally, I think it is so risky to purchase gold at this moment for its unpredictable fluctuation in price. The metal price may continue to go up but just in a short time. Gold speculation for immediate profit could lead to the inevitable bubble. Gold bubble will have negative impact on the economy and gold speculator alike.

Mr. Le Van So, Director of The Bank for Agriculture and Rural Development of Vietnam (Agribank)

Gold should not be used to determine the value of things

The absurd price of gold in recent days is pushed up by the global price, not by any sudden growth of the internal economy.
  
The real estate market is sluggish and seemingly frozen; thus, people will turn to gold speculation. When the supply could not balance the inflated demand, the price will surely go up.

Recent increasing price is mainly caused by customers’ psychology not by economic fluctuation. Viet Nam’s economy is on the healthy growth.

Personally, I think that customers should not shift to gold at this moment as the fluctuation will last just in a short time. In addition, customers had better use the Vietnamese currency, instead of gold, to determine prices.

Mr. Truong Van Phuoc, Director of the Foreign Exchange Management Department of the State Bank

Gold option

People should use gold option offered by commercial banks as an effective tool to reduce the risks relevant to gold.

A gold investor may use option strategies as follows: When wishing to acquire gold, he will write a put option. The option buyer can buy or sell a certain amount of gold at a strike price after paying a premium to an option seller immediately at the moment signing the contract. The seller has the obligation to purchase at that strike price despite the spot price (market price) of the gold, if the buyer does choose to exercise the option.

Normally, banks and gold dealers are option sellers. At this moment, when the gold price is in great fluctuation those who want to use gold as means of payment had better stop spending money on gold in favor of using gold option.

Mr. Truong Van Phuoc, Director of the Foreign Exchange Management Department of the State Bank 

With a minimum transaction of 100 taels and a schedule of at least 2 weeks, buyers can write a put option.

Thanks to this service, customers can ensure the payment ability and avoid heavy losses when the gold price goes up or even gain profit when the metal price goes down.

The sellers either can either ensure the expected profit if the gold price falls or can earn more profit when the price is up.

Currently, only four banks can offer the gold option service, including the Vietnam Export Import Commercial Joint-Stock Bank (EXIMBANK), the Asia Commercial Bank (ACB), the Sai Gon Commercial Bank (Sacombank), and the The Bank for Agriculture and Rural Development of Vietnam (Agribank).

By MG - Translated by Van Hanh

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