Arguably one of the oldest continents in the world has had a revered relationship with one of the oldest forms of currency known to man, gold.
Gold traditions stretch all across Asia and have for centuries, leaving many countries like India, China and Vietnam in the midst of the global gold mania.
But with all of the obsession over the yellow metal, some countries fail to produce enough gold to meet their incredibly high demand.
Earlier last month we reported, China had been exploding with gold fever. To harness the widespread demand to sell gold at such high prices, the country restricted its gold exchanges to simply two, both being under the control of the government. The government said it was for the protection of the buyers and the country to limit the number of exchanges as only months earlier they were popping up all over the country.
And just this month it was reported that China's gold imports were being increased by record numbers. The Lunar New Year, occurring on January 23rd, has had investors racing to gold and creating an influx in demand for the precious metal, as it often does each New Year. This year investors seek to protect their wealth by hedging against the financial turmoil since worldwide, including dropping property prices and inflation rates soaring.
China's gold story is addressed by Mineweb.com, stating “a neatly controlled and officially approved gold rush has been very welcome to date. Any hint of panic buying, in contrast, might perhaps remind Bejing just a little too much of what's been happening in the neighboring, gold-heavy and equally Communist state of Vietnam.”
While in Vietnam, it is a very similar story. The country, which has the closest ties to tradition, heritage and culture with China, also has a massive gold problem.
According to the Vietnamese state television, the nation looks to import $2.5-billion in gold during 2012.
This is up nearly 10% from last year's total imported. The government says unless the gold market stabilizes, the amount imported will be a record high.
The goal is to stabilize the gold market therefore Vietnam's central bank has allowed more than 10 companies to import a total of 2.1 tons of gold for jewelry production.
Efforts were already made last year to do so by increasing the penalties for gold trading violations, raising the maximum fine to 500 million Vietnamese dong ($23,860).
The government tried to narrow the gap between domestic and world price of gold back in September by allowing banks and gold companies to import the metal.
Now, companies like Jewel Park Vina Ltd Co, Son Duong Vang Ltd Co, and DI Ltd Co have been granted quotas to import more than 300 kilograms of gold each. DI has been granted the highest amount to import of 0.45 tons, followed by 0.36 tons for Jewel Park Vina and finally 0.32 tons of gold for Son Duong Vang.
The remaining seven companies are allowed to import 0.13-0.18 tons of gold.
All of this gold being imported will be used for jewelry production only, to then be exported.
The central bank will be expecting to take over gold bullion production and reduce the number of gold bar traders with higher capital and market share requirements.
Within a nation that has gold ingrained so deeply in its roots that it even dons the country's national flag, Vietnam hopes that by importing more gold, the market will become a little less volatile.
Traditions in Vietnam, similar to China, have gold as a very important commodity as it represents wealth and luck. During the Chinese Lunar New Year, which is celebrated by millions around the same time in Vietnam, red envelopes are filled with gold coins and meals have gold represented in the food they eat. More recently gold jewelry has been either passed down from generations or more has been purchased, specifically for the New Year celebrations.
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