Creating artificial demand to manipulate gold prices against global trend were tricks employed by Vietnamese gold dealers to make the most out of the gold hype on the God of Wealth’s Day earlier this week.
As per Vietnamese tradition and custom, the tenth day of the new lunar year, which fell on February 6, is the day when the God of Wealth returns to heaven, creating the belief that buying gold then would bring good luck and prosperity throughout the year.
Every year on this day, Vietnamese would jostle for gold across the country, most noticeably in Hanoi, with many willing to queue for hours under the sun outside gold stores to get their hands on the luck-bringing metal.
What they did not expect was the prices would soon slump following the God of Wealth’s Day buying spree.
Less than 24 hours after the closing of Monday’s sales, local gold companies have reported over-the-moon sales and profits.
Hanoi-based DOJI Gold and Gems Group reported a 120-percent increase in the number of products sold on Monday, compared to last year’s God of Wealth’s Day.
The gold trader had sold 80 percent of its products as of Monday afternoon, including 5,000 gold rooster sculptures, with sales estimated to be higher than the VND365 billion (US$16.29 million) raked in last year, DOJI sales director Tran Nhu My told local daily Thanh Nien.
Ho Chi Minh City-based Phu Nhuan Jewelry (PNJ) reported a record revenue of VND560 billion ($25 million) on Monday alone, with God of Wealth-exclusive products making VND490 billion ($21.88 million), twice as much as they did last year.
Numerous other gold companies and stores also reported similar flying-color revenues on Monday.
All those hours spent jostling for some New Year luck many have brought nothing but bad luck to Vietnamese gold buyers, as economic experts soon pointed out how local companies had intentionally overpriced their gold to take advantage of the hype.
On February 2, four days before the God of Wealth’s Day, gold prices in Vietnam rose to VND37.2 million ($1,661) per tael (37.5 grams), despite the global prices dropping by $8.1 to close at $1,202.2 per ounce the same day.
Local prices continued its climb over to February 3, peaking at VND37.9 million ($1,692) per tael while the global market only saw a slight increase of 0.92 percent.
On the God of Wealth’s Day, the precious metal opened at VND38 million ($1,696) per tael, only to plummet in the late afternoon when the hype had been over, eventually closing at VND36.2 million ($1,616) per tael buying.
Those who bought gold early Monday and sold them the next day would instantly lose about VND1.8 million ($80) for every tael of gold.
To add to the hype, local gold companies repeatedly published news updates on their websites on Monday, assuring customers that gold prices would continue to rise for the time to come as a result of high demand.
“There were certain signs of speculation on the God of Wealth’s Day,” Dr. Bui Quang Tin, a Ho Chi Minh City-based professor of business administration told Thanh Nien.
“The fact that local gold prices went against the global trend stems from the isolation of the domestic market with the global market, making it possible for local investors to manipulate the market.”
Another economic expert who asked not to be named claimed to have noticed signs of local gold giants cooperating with one another to together raise local gold prices, forcing smaller companies to follow suit.
“That would be a nonmarket move that goes against the benefits of customers and should be penalized,” the expert stressed.