Saigon Jewelry Co., the country’s sole gold bullion producer, has recently asked permission to turn gold jewelry into SJC gold bars to make up for the short supply, but insiders said this will open the door to smuggled gold. The proposal was submitted to the State Bank of Vietnam for consideration early this week, but SJC has yet to receive any response, it said. The country’s largest gold trader said domestic sources of raw material for gold bar production have increasingly fallen short, while the market is full of gold jewelry, which is much cheaper than raw material gold. “Converting [gold] jewelry into gold bullion will help increase supply and narrow the gap between domestic and global gold prices,” the company said. It added that it is now a suitable time for collecting jewelry from the public, as gold prices remain high. SJC also asked to be allowed to use the gold material bought from domestic gold mines to produce gold bullion. “As the mines all have licenses, authorities can manage the gold production it supplies us,” the company said, adding that the move, too, will help increase supply without affecting the exchange rate.Experts concerned Industry insiders, however, expressed concerns that once the proposal is approved, smuggled gold will be regularized and thus affect the market as well as the foreign exchange rate. Tran Thanh Hai, CEO of the Vietnam Gold Investment and Trading Corporation, said the market is now full of the 1-kg gold bullion, whose prices are VND2-3 million a tael lower than SJC bars. Such a huge source of gold remains unconsumed because the central bank has recently tightened gold bar production, he said. “If the central bank permits SJC to convert jewelry into gold bullion, the gold smugglers will take the chance and reap whopping profits,” he warned. “The smugglers will first turn the 1-kg gold bars into jewelry, then sell the jewelry to SJC and rake in money,” a director of another gold trader said.