Back in June of 2008 after the Cambridge House Investment Conference I wrote about how Vietnam had limited gold imports but with all the updates to RunToGold it appears the article was lost to the Internet ether.
The last time I was in Vietnam to visit a few factories, including one of Nike's, I found the people so nice and gracious, learned about the mangosteen for the first time and had the best ice cream in the whole world. And the chocolate pancakes were amazing. The extremely low prices would amaze you.
Bloomberg reported on 12 November 2009 that 'Vietnam will resume gold imports for the first time since June 2008 ... Five or six companies will be allowed to bring in unlimited amounts of gold' [emphasis added].
The Vietnamese, like most in the East such as China, India, etc. have a severe case of gold bugitis. Vietnam, a tiny country of about 86 million people with an average per capita GDP of $1,042, is the largest gold retail investment country ahead of India. Of course, this is somewhat misleading because the GFMS distinguishes between jewelry and investment demand.
GOLD TRADING AT ABOUT $1,300 PER OUNCE
Bloomberg also reported:
The price of gold in Vietnam was 27.5 million dong ($1,539) per tael today, according to a telephone directory information service run by Vietnam Posts & Telecommunications. It earlier reached a record high of more than 29 million per tael, online newswire Dan Tri reported, citing local jewelers. One tael is about 1.2 oz of gold.
Some simple math reveals that $1,539/1.2=$1,282.50 or 29/27.5*$1,539/1.2=$1,352.45.
VIETNAM DONG EVAPORATES
The Vietnam Dong has been rapidly evaporating and losing their purchasing power. Many contracts, such as real estate sales, are being made using gold. Gold is money and is reasserting itself as currency in Vietnam. After 18 months of failed policies the helpless government has retreated from the import restrictions because the market is more powerful than governments.
Gold buyers in Vietnam have been buying gold at about $1,300 per ounce of physical gold in the spot market. The restriction on gold import restrictions by the Vietnamese government will lower the cost of gold in the Vietnamese spot market. We can assume, everything else being equal, that gold demand will increase because of the lower price.
This is almost entirely real physical gold demand and not phantom paper products like the problematic GLD ETF or other tools of the gold cartel engaged in the central bank gold price suppression scheme.
If the Vietnamese are willing to trade their paper illusions at such a discount then what happens when holders of the larger currencies that are lower in the liquidity pyramid decide to do the same? Oh wait, India already did and the gold price quickly jumped 5%. The Great Credit Contraction has just begun and the fiat currencies are hastening their evaporation.
Note: Roger Knights was the first to hone in on the issue over at Seeking Alpha with 'Is it possible they're using ordinary ounces, not Troy ounces? If so, that would put their price in line with the price elsewhere. ... 'PS: What I mean is this: were ordinary ounces used in the conversion from taels?'
Nice Roger! You honed in on the issue: What is an ounce? A tael is 37.429 grams. There are 28.35 grams per ounce and 31.1 grams per troy ounce. Would sure be nice if we could likewise resolve the issue: What is a dollar?