Due to lack of interest among gold traders, auctions are not being held for a long time, said the Bangladesh bank.
It’s believed that if auction is called, buyers make ridiculously low bids, Tk. 3000 for a bhori (11.664 grams) whereas the market rate is Tk. 40,000.
Former Bangladesh Bank spokesperson and executive director, M. Mahfuzur Rahman, said: “since the buyers make very low calls, the auction was stopped; also gold traders told us in 2008 that there wasn’t any demand for gold.”
However, president of the Bangladesh Jewellers’ Association, Gongacharan Malakar, told Bangla Tribune: “if Bangladesh Bank sells gold at the current world rate, we will buy all gold the bank can sell.”
Bangladesh Bank says the auction is suspended for two reasons, court cases on gold stored in the vaults of the central bank are still ongoing and, secondly, once auction is called, buyers bid very low.
Only gold in vaults, which are resolved through court can be auctioned; also, impounded gold is usually put under the hammer.
Meanwhile, gold biscuits are purchased by the bank.
On the other hand, the proceeds from the auction are given to the government.
The last auction was in 2008; that year, 91 kg gold was sold in four stages. Since then, a little more than 963 kg of gold has been deposited.
Since independence, Bangladesh Bank added 2300 kg of gold to its reserve, buying from the impounded precious metal.
Meanwhile, the central bank has halted the auction of 10 kg of gold as there’s a dispute between revenue detectives over the making of the report.
A joint investigation report in 2011 by Bangladesh Bank, NBR, Tariff Commission and ministry of industry, said: “no gold is imported legally; gold is being smuggled in from Singapore and Dubai and sold in the market. As a result, government is losing revenue.”
Since there isn’t a provision to import gold commercially, gold traders want to buy the metal preserved in Bangladesh bank vaults. A letter in this regard was sent to Bangladesh Bank governor, Fazle Kabir.
General secretary of Bangladesh Jewellers’ Association, Dilip Kumar Agarwal, said: “though there’s a rise in the demand for gold, we cannot import due to complex rules.”
In the country, the gold market depends on smuggling; every year 90 per cent of demand for gold is met through the metal brought in illegally.
The yearly demand of gold is 30-40 tonnes; most of it is coming through shady channels.