Vietnam’s gold exchanges track gold prices at the Tokyo Commodity Exchange, which is open from 7 a.m. to 2 p.m., the London Bullion Market Association, open from 1:30 p.m. to 10:30 p.m., and Comex in New York, open from 7:30 p.m. to 12:30 a.m. (local time).

Daily trading at Vietnam’s gold exchanges starts at 8 a.m. and goes until 11 p.m., with an hour off at noon.

One tactic tried by many traders is to keep gold in their accounts overnight, hoping for a sharp rise in price by the next morning. It’s a very risky gamble.

“There was one time when I held a thousand taels overnight (a tael is roughly 1.2 troy oz). I couldn’t sleep a wink that night. Anyway, I was lucky that time and made VND240 million (US$13,500),” recalled Quang, a regular at the VGB gold exchange in Ho Chi Minh City.

But then he owned up to losing tens of millions of dong when he tried the same tactic on another occasion.

One of Quang’s fellow traders, who asked not to be named, said he had lost more than VND1 billion ($56,480) in one night when the gold price plunged without warning.

Huynh Trung Khanh, vice chairman of the Vietnam Gold Business Association and a consultant to the World Gold Council, warns that trading gold in Vietnam is extremely risky for individuals.

The only safe way to trade gold is to take advantage of any price arbitrage between Vietnam and the big foreign commodity exchanges, but this is off limits to individual traders, Khanh said. Not so to banks.

“They can buy gold in Vietnam and sell it at exchanges in other countries when the domestic price is lower than the international price, and vice versa,” he said.

“When the local price catches up again, they stop trading gold until another chance for arbitrage comes up.

“What a Vietnamese retail investor can do, if he wants to play the arbitrage game, is take advantage of the different prices at the gold exchanges within the country,” Khanh said.

Chief executive Tran Thanh Hai of the Vietnam Gold Business Company, which operates the VGB exchange, said that even when the gold price moved against them, traders should stick to their guns.

“Say a trader sells 20 taels when the spot price is $963 per oz., expecting the price to drop. Instead, the price goes up to $975, so he should sell 40 more taels. He will still come out ahead if the price subsequently falls to $971,” Hai explained.

He also suggested another tactic; that of placing buy and sell orders at different prices. Any profit is small but it’s a relatively safe strategy.

When a trader buys a contract at a gold exchange in Vietnam, which is done in lots of 10 taels, he only puts down seven percent of the gold’s market value.

The balance is covered by an automatic loan from a participating bank, which charges interest at a rate of 4.5 percent per annum.

For example, Techcombank provides the loans at the VGB gold exchange.

If the gold price declines enough to wipe out a trader’s cash outlay, the gold in his account is automatically sold. For this reason, most traders put down 10 percent of the gold’s value to give them breathing space.

For money lying idly in a gold trading account, the annual interest rate is 3 percent.

Source: Thanhnien News