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Vietnam bans "gold as money."

Discussion in 'Gold Silver (All things Metal)' started by phideaux, Apr 7, 2012.



  1. phideaux

    phideaux Mother Lode Found Mother Lode

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    [TABLE]
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    [TD]Restrictions on bullion-related businesses

    Thursday, Apr 05, 2012, Posted at: 16:53(GMT+7)


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    As per a decree issued by the Prime Minister’s office on April 3, gold has been banned as a medium for exchange, along with seven bullion-related activities that will take effect from May 25.
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    The decree prohibits use of gold as a medium of exchange; manufacturing gold jewellery without a licence from the central bank; trading gold without a licence; and conducting any other gold-related businesses without the approval of the Prime Minister and the Central Bank.

    In addition, licensed gold enterprises must satisfy requirements such as having registered capital of VND100 billion; having operated in gold trading for two years; paying tax above VND500 million and having at least a branch in three central provinces and cities.


    As per the decree, licensed banks and credit institutions must have a registered capital of over VND3 trillion and branches in five provinces and cities.

    Moreover, gold producers must be registered under the country’s law to make gold and have good working facilities.

    Furthermore, the State Bank of Vietnam (SBV) ordered five banks including Asia Commercial Bank (ACB), Dong A Bank, Vietnam Export Import Bank (Eximbank), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Vietnam Technological and Commercial Joint- stock Bank (Techcombank) and Saigon Jewellery Company to send detail reports of their network for selling and buying bullion in the country, along with names and address of branches.

    For setting up a network in the country and for meeting the demands of domestic gold consumers, five banks and jewellery companies have been asked to expand operations in every district in the country.
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    http://www.saigon-gpdaily.com.vn/Law/2012/4/100611/
     
  2. Hystckndle

    Hystckndle Daguerreotype Fanatic Site Mgr Site Supporter

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    HAH !!!
    Interesting.
    This means it WAS happening !
    ( ya think ? )
     
  3. phideaux

    phideaux Mother Lode Found Mother Lode

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    I would guess there is a huge black market for just about everything in Vietnam, and I would guess gold is the preferred medium of exchange.
     
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  4. Hystckndle

    Hystckndle Daguerreotype Fanatic Site Mgr Site Supporter

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    Yupper !!!:banana:

    Hence the hoopla !
     
  5. ~BS

    ~BS Gold Member Gold Chaser

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    interesting. seems like the govt wants to steer people towards more use of the currency and banks.

    people there avoid the currency and banks for large transactions and wealth accumulation because the banks are corrupt, and the currency has a high rate of inflation. For example, property purchases would be commonly quoted in gold.
     
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  6. smilershouse

    smilershouse Gold Member Gold Chaser

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    Interesting BS, I had no idea of this.

    I see this move as a goob attempt to sway people away from a rising trend market, and away also from a commodity that will eventually trash the dong. 90 million people becoming independent from the banks as well as individually stronger and empowered is a definite no, no in commie world.

    Just thinking allowed;.

    SH
     
  7. ~BS

    ~BS Gold Member Gold Chaser

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    ^ Yeah. have some friends from there and took a few trips out there. Most asian people (aside from the japanese and koreans maybe) really don't trust the banks or govt. Their system is far more corrupt than ours. If you have any immigrant friends or family, you'll notice that they also have a tendency to avoid the US banking system because of this lack of trust. Instead, they'll dump their family savings into home safes. Every once in a while you'll hear about one getting stolen, which is sad because these families also tend to be on the poorer side.

    In vietnam, gold is pretty big as far as storing any family wealth. Gold trade is controlled by the govt (communist), and you need to be a licensed dealer to buy and sell gold to regular people. It was already tightly controlled by the government, so not sure how much more stringent these new regulations are. The "medium of exchange" restriction thing is new though. But they were always trying to promote the banks and the dong as being safe, which I guess isn't that much different from what the US govt. does.
     
  8. smilershouse

    smilershouse Gold Member Gold Chaser

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    Thanks BS,

    The bank and Goob in the Western, developed groups are also corrupt, - just a little more sophisticated in which to hide its corruption from its more evolved, and sophisticated people.

    Anyways, looking at the bigger picture, Viet Nam's banking system is as flawed as ours really, hence the banks also lean on its whorish goob to change the rules.

    Nuff said,

    SH
     
  9. Hystckndle

    Hystckndle Daguerreotype Fanatic Site Mgr Site Supporter

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    Thanks BS,
    FWIW the wife is from eastern Europe and the sitrep there is very similar.
    Regards,
     
  10. TnAndy

    TnAndy retired guy Midas Member

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    Anytime a govt "bans" something, it simply makes it more valuable and desirable.
     
  11. Malus

    Malus Gold Member Gold Chaser

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    In a world gone mad....
    Which it will continue to be so.......
     
    Last edited: Apr 8, 2012
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  12. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    We should get our troops over there to kick some Asian booty...!
     
  13. GOLD DUCK

    GOLD DUCK Mother Lode Found Mother Lode

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    QWAK,I learned that GOLD is the ONLY real MONEY in 1972 from a HOOKER in NAM who explaned to me the DIFERENCE between MONEY and CURENCY and that Americans are basicly stupid/ignorent and believe what ever there goverment says is TRUE rather than THAT all governments LIE and have been for many THOUSANDS of years! :idea::realmad:

    Making any thing agenst there LAWS just makes it more PROFITABLE for any one who sees the OPERTUNITY and decids to EXPLOITE it -- starting with the GOVERNMENT! :idea::cry_smile:

    WE don't need BANKERS or the GOVERNMENTS they run -- we just need to be FARE with ALL others and not TRY to EXPLOITE them! :idea:

    It can NOT be forced by LAW -- it MUST be a FREE WILL choice! :thumbs_up:

    the DUCK :s9:
     
  14. Alabama-Mike

    Alabama-Mike New Member

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    I can see a similar version of this "ban" being enacted in the U.S. within a relatively short period of time.

    In my state, the local law enforcement would love to outlaw the sale of gold jewelry and coins outright, due to the HUUUGE workload they are having to keep up with involving stolen gold. From catching the crooks, to trackingthe paperwork of every single pawn & sale of jewelry, to trying to catch the craigslist 1 man gold buying operations.....They HATE everything to do with the whole explosion of the industry.

    It's not an industry that can be taxed and or profited from like drugs or traffic enforcement, and they f'ing loathe it.

    A wise man once told my pet turtle years ago,
    "Get into this business(referring to brokering scrap&coins)...you CAN'T go wrong as far as making money. It's a CASH based business structured very similarly to the illegal drug trade, and any turtle with $1000 to spare can learn how to make an INSANE amount of money."

    He turned out to be right on many accounts, and the past 13 years have been very lucrative (not to me...but my friend tells me it's been good to him), even by taking on a wholesale, fixed payout rate approach vs. sizing the customer up & fleecing accordingly way of doing it.

    However, the state of the gold trade here is absolutely out of control now, with literally dozens of new names popping up DAILY on the local gold license registry.

    It seems as if every night the news has a new report of b&e arrests with the perps hitting 10+ houses a whack. If this continues, and I see no reason why it is going to improve, the gov't will step in in a heartbeat and place restrictive measures on the trade.......Coin Shops, Scrap Shops, Jewelry stores, small time investors, will ALL be affected by such regulation, and it won't put a dent in the issue.

    -Because it ALL comes back to what my buddy said those years ago....it's a CASH based, essentially-untrackable business...and they will do everything they can to shut it down.

    =-/ My above rant may or may not be directly related to the OP's article, but I feel a change in the way Americans are "allowed" to conduct business related to PM's is ABSOLUTELY in the pipeline. See:lousiana's attempt to ban yard sales or flea markets/whatever a few months back as further evidence that a change is coming.
     
  15. ~BS

    ~BS Gold Member Gold Chaser

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    -Because it ALL comes back to what my buddy said those years ago....it's a CASH based, essentially-untrackable business...and they will do everything they can to shut it down.
    ---------------------

    I think this part of your post hit the issue on the head. the reason why the govt only makes $100 bills and tracks large deposits/withdrawals is because it enables them to have control over the system.

    You introduce gold trade to the equation, a roll of 20 GAEs is liquid, portable, worth $34,000 and can fit in your fist. Then you start doing transactions with gold and FRNs alone or barter type transactions (like you said similar to the illegal drug trade) and the govt. is cut out of the loop entirely. At the very least, as you said, it becomes a huge PITA to attempt to track anyof it becuase it's an underground industry.
     
  16. Hope+Change

    Hope+Change Gold Member Gold Chaser

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    Cash is such an outdated concept. It is a barbarous relic of the days when the government wasn't able to monitor and tax every transaction you make.
     
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  17. phideaux

    phideaux Mother Lode Found Mother Lode

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    "Gold is Money"


    Vietnam goes nuclear on gold

    Posted Apr 12 2012 by Jan Skoyles in Gold bullion, Original commentary with 0 Comments

    Vietnam is frequently cited as an example of somewhere which acknowledges gold’s role as money; it is a medium of exchange and is used as such every day. Houses come with two prices in Vietnam; the price in dong and the price in gold – gold is most often the favoured form of payment (Thiers’ law in effect).

    Up until last week, three forms of money circulated in Vietnam: the dong, the US dollar and gold. However, in an attempt to ‘stabilize’ the economy, the government and the central bank have announced a decree which will continue their mission to restrict the gold market by banning its use as a medium of exchange and issuing 7 ‘solutions’ in regard to bullion related activities.

    The idea behind the 7 solutions, or measures, is for the government and central bank to gain more control over the gold market and reduce ‘goldization’, the practice of replacing the dong with gold in transactions. The 7 measures (outlined below) aim to reduce the impact of gold on monetary policies, prevent market speculation and to (apparently) protect the rights of the institutions and individuals involved in the gold market.
    1. The central bank will oversee and set up quota for bullion production for each period.
    2. The number of bullion traders in the local market will be reduced and bullion trading activities are to be discouraged.
    3. The State Bank of Vietnam (SBV) will closely supervise the import and export of physical gold.
    4. The SBV will supervise more closely the production, sale and purchase of jewelry gold.
    5. The SBV will closely monitor other gold trading activities, including gold trading on international accounts, gold derivatives trading, etc.
    6. In the case of adverse conditions, the central bank will intervene in the local gold market.
    7. The Government will regulate the gold market via tax policy.
    It appears the SBV will have a monopoly over the majority of all factors in the gold market. This is not a surprising development; in November last year, the Prime Minister announced Saigon Jewellery Co (SJC), the country’s largest gold trader and producer, would be placed under government management. The company currently owns 90% of the gold bar market in the country. Due to tighter regulations this will result in SJC being the only remaining gold producer in the country.

    These regulations are not just on a small market; as GATA reports, demand is so strong in the country for gold that 5 banks and jewellery companies “have been asked to expand operations in every district in the country” and alert the government of their plans for organising gold trading networks. Local media are speculating this is an indication of the government choosing the banks as official sales agents for the central bank. Meanwhile, over 2,000 smaller gold shops in Hoi Chi Minh City are facing closure due to tightened regulations which state they must close due to their low levels of registered capital.

    The closure of smaller gold traders and producers will no doubt pre-empt an increase in counterfeit gold bars, something which will increase if the rumours of government plans to eventually ban all gold production are to be believed. Black markets allow counterfeit and sub-standard goods to circulate far more easily. Over 10,000 companies are expected to be driven ‘underground’ as a result of these new regulations demonstrating there is still high demand for gold bars in the country.
    Resolution 11

    These measures are most likely as a result of the ‘successes’ of Resolution 11. The resolution, which has been implemented since February 2011, is an inflation-fighting strategy. At no point in the decree does the words ‘economic growth’ appear. The aim of the resolution is to bring inflation down to a single-digit in a steady manner, whilst reducing public debts to ‘manageable levels’ according to the Ministry of Planning and Investment. The government aim to gain tighter control on money, credit, the budget deficit and the state-owned enterprises.

    Private credit is a major problem for the Vietnamese government. Growing from 40% of GDP in 2001 to over 120% of GDP in 2011, it now holds the world-record for debt creation.

    The government are also keen to clamp down on the type of deposits received by banks. Many commentators mention with the surprise the ease with which citizens are able to switch between the dong, the dollar and gold. In order to reduce this, the central bank last year lowered the interest received for dollar deposits to 3% and maintained the rate at 14% for dong deposits.

    The government’s reasons for preventing the use of gold as a medium of exchange are officially to try and steady the shaky dong. Despite the introduction of Resolution 11, the dong has gained in strength by 0.8%, after a four-year decline of 26%. Meanwhile March’s inflation figures showed levels of 14%, down 9% since August last year. Some expect inflation to head below 10% by the end of this year.

    So are Resolution 11’s austerity measures and inflation-reducing drives enough to bring the country’s economy under control and transfer citizens’ faith from the world’s oldest money to the Vietnamese dong?

    High gold demand in Vietnam

    The Vietnamese are big gold-buyers; the decree comes in light of information that in March the gold price in dong rose faster than the global reference price (dollar/troy ounce). A WGC report stated the Vietnamese gold price had climbed 18%, compared to the global price climb of 11% in the last year.

    In the decree, locals may still buy, sell and own gold, but gold may not be used as a means of payment. This may cause issue for the general public and companies as in 2011 gold was more widely used than any other currency in Vietnam. The country owns more gold per capita than either India or China; the amount of privately held gold is expected to total 300-500 tonnes.
    Gold seems to feature in every element of the government and SBV’s plans to calm the economy; in a similar move to Turkey, the Vietnamese government are running a national campaign to persuade citizens to move their privately held gold into the custody of the banks. They argue this would help provide the authorities with more leverage to stabilize the economy.

    The strength of gold as a medium of exchange does little benefit for the Vietnamese dong as each time a citizen chooses to use gold rather than the Vietnamese dong, more money is drawn away from the national currency and the financial system. However locals do not seem to care much for the strength of their national currency, it hasn’t exactly served them well so far.

    Last year the cost of living in Vietnam rose by 18.6%, far above the maximum rate of interest offered by banks earlier this year of 14%. The increase in the cost of living, according to the Economist, is third only to Venezuela and Ethiopia.

    Learn to speak Vietnamese

    We should all be learning from the Vietnamese. The most quoted reason for gold purchases in Vietnam was as its use as a savings vehicle. We, and other market commentators, have repeatedly reiterated the need for individuals to invest in their own ‘gold reserves’ as a means of protection against all the issues which has placed the Vietnamese dong in such strife. These issues – credit creation, high debt levels, inflation and weak currencies – are something which the majority of Western countries have in abundance.

    Whilst it appears Resolution 11 is having a positive impact on the stabilization of the inflation rate, the cost of living is still on the up and bank rates still do not compensate for this. Savings continue to be devalued as they do in Britain, the Eurozone and the US.

    The Vietnamese are currently keen to own gold as it offers them a form of security and a guarantee against their economic system. The issues which currently surround economies are not creating environments which are conducive to paper money as a form of exchange. The government needs to be careful that these new gold policies don’t increase the insecurity the public already feels. Currently, it is estimated that 20-60 tonnes of gold is smuggled into the country each year, there is little sign that this will decrease.

    Citizens are voting with their money, and that money is gold.

    Gold is money?

    The actions of the government and the SBV beautifully demonstrate the fear authorities have of the threat of gold over a national currency. But even more so, it shows the power of individuals when they have the right to choose and how much this concerns politicians and central bankers.

    In the US, Dr Ron Paul is famous for frequently asking Ben Bernanke to allow US citizens to spend in gold and silver. Unfortunately it is still not allowed, this can only be for the sole reason that it would demonstrate the lack of faith in the US dollar, as seen in Vietnam with the dong.

    In the UK, Douglas Carswell MP is campaigning to repeal legal tender laws. At present UK citizens may spend in what they like, but realtors will only accept what the banks can legally accept – British pounds. In Vietnam they are heading down a similar path, in May last year it was announced that within 2 years it will become illegal for banks to accept gold on account. We are now looking at currencies which are no longer backed by confidence but by authority and the law of the land.

    The actions of the Vietnamese citizens are evidence enough that gold is money. One does not need a government to tell us so. People are worried that the promises of governments and central bankers to be able to pay is something which they cannot manage; the debt burden is now so great worldwide that they may have to rely on further promises.

    In a recent article we quoted a Vietnamese sociologist; “Empires may fall, currencies may change … gold will always survive.” This seems to be relevant once again.

    http://therealasset.co.uk/vietnamese-gold/
     

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