“Surfing” when gold prices increase
On October 22, early in the morning, at 7:15 a.m., the gold price at Doji was listed at VND70.3 - 71.1 million/tael (buy - sell), unchanged from yesterday afternoon (October 21). Meanwhile, the gold price at SJC was listed at VND70.25 - 71.05 million/tael (buy - sell), an increase of VND100,000/tael in the selling direction.
In general, in the week from October 16 to October 22, domestic gold prices increased by 400,000 - 950,000 VND/tael and established the third consecutive week of increase. In times of economic difficulty, many people believe that gold will be a safe haven, so there is a phenomenon of "surfing" investment according to gold prices.
Ms. Han Thi Binh, owner of Kim Phat Manh I private gold business in Ho Chi Minh City, said that recently, many amateur gold “surfers” have appeared in the market. They often follow the international market, if the world gold price goes up, they will buy SJC gold bars with the expectation that this type of gold will increase in price even more.
"When SJC gold reaches its target price, the traders will quickly sell to take profit. The price of SJC gold will drop in the blink of an eye. Therefore, at this time, those who do not understand the market and buy SJC gold may be at a disadvantage," said Ms. Binh.
Last week, the domestic market for both SJC gold bars and gold rings fluctuated strongly.
In mid-October 2023, Ms. Ho Thi Phuc, living on Nguyen Dinh Chieu Street, District 3, Ho Chi Minh City, withdrew her savings to buy nearly 6 taels of gold, saying: "I have a little money, I used to deposit it in the bank but now that the gold price has increased, I withdrew the money to buy it. I don't buy or sell any gold, but I keep it as an asset, when I need money, I can sell it for more value."
Meanwhile, Mr. Nguyen Van Dat, living in Tan Binh District, Ho Chi Minh City, is in need of money so he is selling 5 taels of SJC gold. However, Mr. Dat said that he will continue to monitor and invest in gold in the future because according to him, the price of gold will continue to increase.
"I bought gold about 2 months ago, now I'm selling it to make a profit. In my opinion, the price of gold will continue to increase. I'm still holding some gold and observing. Depending on the situation in the future, I can buy gold or sell gold," Mr. Dat shared.
Financial expert, Dr. Nguyen Tri Hieu, assessed that currently, the gap between domestic and international gold prices is too high. This gap is due to the lack of connection between the Vietnamese and international gold markets. Along with that, many years of not importing gold has caused a shortage of gold demand and a shortage of SJC gold bars.
“Enterprises keep gold prices high, pushing risks onto buyers. Not only is the price difference with the world high, but the difference between buying and selling is also high, making the final loser still the customer. Therefore, now is not the right time to invest in gold. Only when the difference drops to a reasonable level, people should invest in gold,” Mr. Hieu pointed out.
Stabilize the gold market
By the end of October 2023, the State Bank was still consulting with gold trading enterprises and economic experts to summarize and evaluate gold management regulations. The State Bank has recognized the story of gold management to create stability in macroeconomic management, thereby controlling inflation, controlling the gold market, not affecting price levels and other indicators.
In a report sent to the National Assembly in early May 2023, State Bank Governor Nguyen Thi Hong informed about the summary and assessment of the implementation of Decree 24/2012/ND-CP on the management of gold trading activities.
Accordingly, the State Bank said it has organized inspections and examinations nationwide to rectify gold trading activities, handle violations within its authority, and request correction of shortcomings discovered after inspections and examinations.
Speaking with Nguoi Dua Tin, Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Trading Association (VGTA), said that after more than 10 years since Decree 24 was issued with regulations on the gold market, the situation has changed, so adjustments are needed to clear the gold market and narrow the gap between domestic and international prices.
"Currently, the domestic gold market is stable, so opening the gold market will achieve the goal of balancing supply and demand in the market, but it cannot be said to affect the foreign exchange market as well as the VND exchange rate. At the same time, the State Bank has also controlled the exchange rate to be stable, even when there is pressure, the exchange rate is still stable," Mr. Khanh stated his opinion.
If gold is allowed to be imported, Mr. Khanh said that first of all, there needs to be a policy to allow the import of raw gold so that businesses can produce and trade gold jewelry domestically instead of collecting smuggled goods. Because if the market is not opened, unofficial gold will still enter the market when domestic gold supply is scarce and prices are higher than international prices.
An expert who worked for a gold import agency in 2010 also commented: “People’s habit of keeping gold has always existed. If we just limit the places where gold bars are sold, people will not keep gold, especially in the current unstable global economic situation, when international gold prices continue to increase.”
The tradition of storing gold still exists and continues to be strengthened in the context of economic fluctuations, inflation... gold always has high value. And, the situation of uncontrolled gold smuggling, massive collection of USD to import gold causing the exchange rate to increase, affecting other imported goods, VND devaluation... are inevitable consequences when the domestic gold market is not connected with the world.
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