You are here
Vietnamese seek safety in gold as currency wobbles
Margie Mason
Associated Press
via Yahoo News
Tuesday, December 21, 2010
http://finance.yahoo.com/news/Vietnamese-seek-safety-in-apf-3562184512.html
HANOI, Vietnam -- Do Hai Ninh has been stashing away her meager earnings until finally saving enough to make a deposit. But the high school teacher isn't about to put her money into a Vietnamese bank with the value of the local currency steadily dropping. She's investing in a safer bet: gold.
Jewelry shops and black-market money changers have overflowed with customers in recent weeks, desperate to unload their Vietnamese dong for greenbacks or gold nuggets as the fast-growing Southeast Asian nation is buffeted by double-digit inflation and the near collapse of one of its largest state-owned companies.
The problems have underlined the downsides of the Communist government's push for rapid economic growth, which has lifted millions out of poverty but created new challenges that the country's technocrats are often ill-equipped to deal with.
... Dispatch continues below ...
Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
Attempts to create national corporate champions have wasted capital with unwise investments and left state-owned businesses loaded with too much debt. Rapid growth in lending, meanwhile, has not been matched by increases in deposits, a phenomenon partly explained by suspicion of banks after previous bouts of hyper inflation destroyed savings.
It all adds up to a financial system creaking under immense pressures that are reflected in the lack of faith Vietnamese have in their country's currency.
"People's trust in the local currency, the dong, has been eroded seriously," said economist Nguyen Quang A, former president of the Institute of Development Studies, the country's first independent think tank, which disbanded in protest last year following a government decree restricting the right to conduct and publish research.
"One of the most important tasks of the government, specifically, the State Bank is to protect the power of the local currency," he said. "The policy aiming for high growth with inefficient investment in the economy, particularly investment in state-owned enterprises and in the government, has led to this situation."
Last week, Moody's Investor Services slashed Vietnam's government foreign currency bond rating to B1 from Ba3 and kept the outlook as negative, meaning it could cut the credit rating again.
It said the country was facing an increased risk of a balance of payments crisis because Vietnam is importing more than it exports, foreign exchange reserves are being depleted to prop up an overvalued currency and foreign capital is fleeing. High inflation, excessive bank lending and problems at Vietnam's beleaguered state-run shipbuilding conglomerate Vinashin were further reasons for the downgrade, Moody's said.
The head of Vinashin repeated Monday that the shipbuilder did not have enough cash to make the first repayment of principal due that same day on a $600 million loan from a group of creditors led by Credit Suisse. He told the official Vietnam News Agency that the company was still awaiting word from the lenders on whether they will agree to delay the payment.
The government has said it will not bail out the company, also known as Vietnam Shipbuilding Industry Group, which owed $4.5 billion (86 trillion dong) in debts as of June. That's equal to 4.5 percent of the country's gross domestic product last year. Vinashin has asked creditors for extra time to make good on its payments after the company's restructuring.
Prime Minister Nguyen Tan Dung last month assumed responsibility for the floundering company, blaming its problems on corporate malfeasance and unchecked rapid expansion into numerous areas outside shipbuilding from animal feed to tourist resorts.
Ratings agency Standard & Poor's issued a statement last week saying the company's woes would likely result in higher bad debts at the country's banks.
"Currently, the government has asked local banks not to collect debts and interest on Vinashin," said senior Vietnamese economist Le Dang Doanh. "I'm sure the government will have to subsidize the interest for the banks because the banks cannot afford not to collect interest while they have to mobilize savings with increasingly high rates."
The local currency plunged to an all-time low earlier this month on the black market, hitting 21,600 to one U.S. dollar in the commercial capital Ho Chi Minh City and 21,500 in Hanoi. It was trading at 21,140 in Hanoi gold shops on Tuesday. The official rate was 19,500.
The State Bank has devalued the official dong rate three times since Nov. 2009, reducing its value about 10 percent against the dollar over that time, but it is still widely regarded as overvalued.
Vietnam's leaders are quick to tout the country as one of the fastest emerging economies in Asia -- after China -- averaging more than 7 percent growth annually over the past decade. The Communist government's embrace of capitalism since the mid-1980s followed attempts at collective farming and central planning that kept the country mired in extreme poverty after the Vietnam War ended in 1975.
But despite all the country's progress, high school teacher Ninh, 33, says she's sticking with something that never loses its luster.
"You can see that the dong is losing its value. Everyday, you go to the market and everything is getting more expensive," she said while exchanging 7.2 million dong ($360) for about 7.5 grams of gold at a bustling gold shop in Hanoi. "It's a safer place for my savings."
* * *
Join GATA here:
Yukon Mining Investment e-Conference
Wednesday-Thursday, January 19-20, 2011
http://theyukonroom.com/yukon-eblast-static.html
Vancouver Resource Investment Conference
Vancouver Convention Centre West
Vancouver, British Columbia, Canada
Sunday-Monday, January 23-24, 2011
http://cambridgehouse3.com/conference-details/vancouver-resource-investm...
Cheviot Asset Management Sound Money Conference
Guildhall, London
Thursday, January 27, 2011
http://www.cheviot.co.uk/news/video/2010/12/the-cheviot-sound-money-conf...
Phoenix Investment Conference and Silver Summit
Renaissance Glendale Hotel and Spa
Friday-Saturday, February 18-19, 2011
Glendale, Arizona
http://cambridgehouse3.com/conference-details/phoenix-investment-confere...
Support GATA by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
http://gata.org/node/wallstreetjournal
Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
Prophecy Drills 71.17 Metres of 0.52% NiEq
(0.310 % Nickel 0.466 g/t PGMs +Au and 0.223% Copper)
from surface at Wellgreen Project in the Yukon
Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit:
http://prophecyresource.com/news_2010_nov29.php
