The price of gold has been on a continuous rise since the beginning of this year, although there has been a slight pullback recently, most analysts believe that the price of gold will continue to increase. This global trend has sparked a gold-buying frenzy among Vietnamese families.
Last month, the global price of gold surged to a historic high of $4,380 per ounce. Driven by demand from central banks and investors around the world, gold has become one of the best-performing major commodities this year. From India to China to Turkey, despite the soaring gold prices, consumers continue to actively purchase jewelry and gold bars, with the wedding season further boosting the demand for precious metals, and Vietnam is no exception.
In Vietnam, gold symbolizes good luck, and people often keep gold hidden under their beds to defend against economic uncertainty. Gold jewelry has long been integrated into Vietnamese culture, playing a significant role in weddings, where family and friends gift gold jewelry to bless the newlyweds with happiness and prosperity.
According to a report by Bloomberg on November 6th, 67-year-old Le Thi Minh Tam has been running around Hanoi for weeks, searching for gold as a gift for her son’s upcoming wedding. She has had to wait in long lines outside stores as the gold inside sells out quickly.
“I’m getting more and more worried because I still haven’t bought enough,” she sighed. “They are now only selling gold rings, and the purchase quantity for each customer is very limited.”
In Ho Chi Minh City, there is an extreme shortage of gold jewelry, with some customers even camping outside a well-known jewelry store overnight just to grab a few gold rings.
“I thought coming at 6 am was early enough, but when I arrived, it was already crowded with people,” said Nguyen Kim Hue, a 57-year-old online food seller. “Last time I came, everything was sold out because all the gold jewelry was gone.”
In 2012, the Vietnamese government implemented a national monopoly policy in response to the hoarding of gold by the public to hedge against the economic instability caused by inflation. The policy stipulates that the State Bank of Vietnam is the sole importer of gold, and grants a license to Saigon Jewelry Company for the exclusive production of gold bars. However, this policy has widened the gap between local gold prices and global gold prices, fueling the black market and causing fluctuations in the currency exchange rate.
Last October, the Vietnamese government ended a 13-year gold import and production monopoly, but the reform is expected to be a gradual process: the central bank still determines the amount of gold imports.
“We have gone through wars and difficult times, so people here have always seen gold as the safest way to invest—a safe haven, something to rely on in tough times,” said Huynh Trung Khanh, Vice Chairman of the Vietnamese Gold Trading Association.
In Vietnam, gold prices have fallen from recent highs, but scenes of gold shops “selling out” are still common. Last week, before a prominent gold shop in Ho Chi Minh City opened, dozens of people lined up for hours, with staff handing out numbered tokens to maintain order. Hue came with her husband and they bought a total of five gold rings.
“At first, the shop owner told me I could only buy one ring, but I persuaded her to sell me a few more,” she said with a smile. “I am so happy now.”
Hue began buying gold since June. “I used to keep my savings in the bank, but now I feel that holding gold is safer,” she said. “This is how I ensure that my funds do not depreciate. This money is for my children’s education and my retirement.”
The World Gold Council estimates that Vietnam hoards about 500 tons of gold, with most of it locked in boxes under the beds of families. In comparison, Morgan Stanley estimates that the second-largest gold-consuming country in the world, India, holds 34,600 tons of household gold. There is currently no reliable up-to-date data on private gold holdings in China.
To curb hoarding and encourage other forms of investment, the Vietnam Financial Investors Association has proposed a 10% tax on gold purchases (including gold bars and jewelry). Currently, the government is considering a 0.1% tax on gold bars to establish data tracking, increase revenue, while also curbing speculative trading and gray market activities. Additionally, the government plans to introduce a national gold trading platform in three phases to bring domestic hoarded gold into the market and further align domestic and international gold prices.
Vietnam’s annual demand for gold is approximately 55 tons, ranking first in Southeast Asia. However, according to the Vietnam Association of Banks, the country only imported about 13.5 tons of gold last year. The new regulations aim to narrow the gap between domestic and international gold prices: currently, gold trading prices in Vietnam are usually 10% to 15% higher than international prices, and the government hopes to reduce this premium to 2% to 3%.