As an experienced financial analyst, I believe this situation in Vietnam and China is a clear indication of investors’ increasing appetite for safe-haven assets such as gold, given the geopolitical tensions and economic instability that we are witnessing around the world. The recent moves by both the Central Bank of Vietnam and the People’s Bank of China to sell gold directly to their respective institutions for resale to the public at discounted prices is a smart response to this trend.
In recent news, crowds of Vietnamese investors have been reportedly gathering outside government-run banks in Hanoi and Ho Chi Minh City with the intention of buying gold bullion at cheaper prices than those currently offered in the local market.
As a crypto investor, I’ve noticed an unexpected increase in demand for gold recently. The cause of this surge can be traced back to the Central Bank of Vietnam’s decision to align domestic gold prices with global benchmarks. To achieve this goal, the bank has started selling gold directly to state-owned institutions such as Saigon Jewelry Company (SJC), Agribank, Vietcombank, BIDV, and Vietinbank. These institutions will then resell the gold to the public, similar to how Bitcoin is bought and sold among people. The news of this move was first reported by Bitcoin.com.
Following the surge of domestic gold prices to unprecedented heights, peaking at approximately $3,620 per tael (37.5 grams) last month, a new initiative has emerged. Under this program, participating banks can now offer gold bullion for sale with a discount of 1.2% compared to the current market prices, which are currently set at around $3,107 per tael.
The central bank is currently probing the reason behind the significant difference in prices. Some knowledgeable individuals propose that this disparity might be related to the Vietnamese dong losing strength. With financial security being a priority for many investors, they are shifting their resources towards gold – a traditional shelter for wealth and a commodity renowned for its price consistency during turbulent economic times. This trend is reflective of the global surge in gold prices this year, which can be attributed to escalating geopolitical conflicts.
According to CryptoGlobe’s report, China’s private sector imported a significant amount of gold – 543 tons – during the first quarter of the year. Additionally, China’s central bank boosted its gold reserves by purchasing an extra 189 tons over the same period.
In the final quarter of 2023, there was a 74% surge in private gold consumption within the country, whereas the People’s Bank of China added to its gold reserves by 38% compared to the previous quarter.
The combination of these elements played a significant role in pushing the price of the precious metal past its previous record high of $2,450 for the very first time. Following this achievement, there was a minor adjustment, and the current trading price is now around $2,330.
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2024-06-08 01:42