Gold shops turn to footwear sales due to slow trade
  • | Tin Tuc, dtinews | August 15, 2012 08:15 AM

Tighter control over the gold market has pushed many gold shops to the brink of closure, and in response they’ve turned to selling other products.


My Tuyen gold shop

Gold market becomes less attractive

The gold mark has warmed up following the sharp rise of the global gold market from now to the year end. On August 11, Saigon Jewellery Company Limited (SJC) listed the buying price and purchasing price of VND42.28-42.37 million per tael, up VND160,000 and VND80,000 compared to the previous day.

However, Nguyen Cong Tuong, Deputy Head of SJC's Sales Department, said, the gold market was not as animated as prior to the announcement of Government’s Decree 24 due to tighter management over gold bullion sales. The decree has restricted gold bar trading to around 1,000 taels per day.

Most of the buyers are small investors and those buying gold for their wedding. Many people have taken advantage of the low interest rate to buy gold for speculation.

Tran Thanh Hai, General Director of Vietnam Gold Business (VGB), said that despite the increasing trend in world gold prices, buyers remained cautious about buying gold at this time. Gold prices are predicted to fall in late August and early September following the implementation of Government Decree 24.

The gold market has only enjoyed a warm spell over the past week. For the last three months gold sales have been slow. Even the sales of SJC which account for up to 90% of the domestic gold bar market have fallen by half compared to previously. Small gold shops have been pushed into an even worse situation.

Tuyen, owner of My Tuyen gold shop at Van Thanh Market, Binh Thanh District, HCM City, said her shop sometimes only received customers who were buying gold for their wedding or for savings. Only a few people bought gold bullion for transactions.

Selling footwear

While shouldering losses, many small gold shops have had to move into other areas. The shops around Van Thanh, Ba Chieu, Pham Van Hai and Tan Binh markets have had to sell other products or simply go bankrupt. Many others have cut their rental space to save money, while others have turned to selling footwear to make a profit.

Truong, the owner of Kim Truong gold shop at Van Thanh Market said, "Footwear sales have helped business. I can earn millions of VND per day compared to just thousands of VND before. To meet increasing demand, I’ve has cut the gold space occupied by the gold counter and expanded the space devoted to footwear.”

Tuyen has also cut her gold selling counter’s space, leasing the remaining area to a footwear shop. She now only focuses on selling jewellery made from gems or pearls.

Being recognised as a national gold brand, SJC is willing to move into jewellery which is considered another way to shift gold. The firm is also considering exporting its products to Thailand, Cambodia.

According to Dr. Le Xuan Nghia, Deputy Head of the National Financial Supervision Committee, despite gold tending to rise from now to the year end, gold investments remain risky due to the disparity between gold prices on the local and world market.

He said the State Bank of Vietnam (SBV) should consider removing the gold import quota, and instead move to an automatic quota mechanism within the regulated limit. The bank should also allow commercial banks to receive the deposited gold to balance the market and prevent risks. After that, the SBV can convert the gold into cash, depending on currently monetary policy objectives.

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