Vietnamese Investors Rush to Buy Gold


Mike Maharrey Mike Maharrey

Mike Maharrey

June 7th, 2024 Comments

A little bit is the first step toward a lot. 

Now, imagine billions of people in Asia buying just a little bit of gold. 

That seems to be the trend.

We’ve reported on young Chinese investors buying gold beans and gold flying off convenience store shelves in Korea.  Gold demand in India recently surged during an important festival season.

And now we have a gold-buying spree in Vietnam.

Banks reported long lines as customers queued up to take advantage of lower gold prices thanks to a government scheme to push domestic gold prices lower. Vietcombank reported as many as 50 customers lined up at one time.

The State Bank of Vietnam (SBV) sold gold bars directly to four state-owned commercial banks at 78.98 million dong (Vietnam's currency đ worth around $3,107.00 USD) per tael (37.5 grams). The banks then made the gold bars available to the public for no more than 79.98 million dong. 

With this price fix, banks are selling gold for about 1.2 percent lower than market prices.

The bars gold bars being sold are produced by the Saigon Jewelry Company. They are considered Vietnam’s “national” gold bar since the government monopolized their production in 2012.

The State Bank of Vietnam is trying to drive down local gold prices that have soared in recent months. The price of gold in dong terms is up over 11 percent through the first four months of the year and has pushed significantly above the global price.

The SVB claims that “illicit factors” are behind the skyrocketing gold price, but according to Central Banking, an independent analyst cast doubt on that claim, saying the price more likely reflects strong demand for the yellow metal. In April, Bloomberg reported that gold demand had exploded due to a devaluation of the dong.

Gold is a popular investment in Vietnam and the government tightly controls gold imports. According to multiple news reports, the high gold price has exacerbated gold smuggling.

A 20-year-old customer told Vietnam Express that she purchased 1 bar. She said she plans to “keep it for a long time because I think this is a stable price.”

The gold rush in Vietnam reflects a broader trend of strong gold demand in Asia with a movement of gold from the West to the East. Franco-Nevada Corp. Chairman Emeritus Pierre Lassonde said the world needs to wake up to this fact.

“The marginal buyer of gold is no longer the U.S. It’s no longer Europe. It’s China. … China takes up over two-thirds of all the annual production…That’s where the gold price is set.” 

Meanwhile, Western investors still haven’t hopped on the bandwagon, despite record gold prices in recent months. Fund managers Leigh Goehring and Adam Rozencwajg noted in their Q1 newsletter that Western investors have lost their influence in the gold market and continued to liquidate gold holdings in the first quarter even as prices rallied.

“Western investors continue to sell their gold while Central Banks and Chinese and Indian retail investors continue to buy aggressively. With gold making record highs, it is clear who is winning.”

Mike Maharrey

About the Author:

Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.