Intellasia Vietnam News Services -- Gold trading floors are casinos

Gold trading floors are casinos
Source: 09-MAY-2008 Intellasia | 07/May/2008 Vietstock
May 9, 2008 - 7:00:00 AM Gold trading floors are casinos, said the Vietnam Association for Financial Investors in a recent announcement that analyses inflation.

Currently, most of people participate into gold trading floors not in order to buy gold for savings but for speculation, hoping to gain profit from difference in gold prices. Therefore, there will be huge amount of idle money injected into gold trading floors and it also requires large amount of gold to serve those demands.

This is in fact a kind of gambling and gold trading floors become legal casinos and a huge amount of cash is pumped into these floors without serving production and business activities. It is high time for the central bank to stop gold trading floors.

VAFI suggested that the gold import duty increase to 10-20% in order to restrict trade deficit, hike duty revenue for the state budget. It is reported that in the first four months the country imported 43 tonnes of gold worth some US$1.2 billion or 50% of last year's gold import. According to VAFI, with such growth of gold import, by the end of this year, Vietnam will have to set aside nearly US$4 billion for import, too large ratio for consumption.

VAFI also proposed the government stop licensing establishment of new financial organisations including banks, insurance companies, financial companies. Commercial banks and gold trading companies should not be allowed to set up gold trading floors.

Instead of licensing establishment of new organisations, VAFI suggested that the government encourage merger for banks, insurance companies in order to form strong financial corporations.

VAFI said that securities loans should be limited. As for new contracts, securities loans should not exceed 30% of mortgaged assets. After a period of six to nine months, the securities lending ratio should cut to 20% or less. After two-years, securities lending activities should be stopped for organisations and individuals in any form.