Seize the investment opportunity
On the afternoon of March 4, at Mi Hong gold shop (Binh Thanh district, Ho Chi Minh City), more than a dozen people were present at the buying counter, waiting to sell gold. Selling 20 round and smooth type 1 gold rings, Mr. Nguyen Van Hung (living in Thu Duc district) said that he bought these rings with savings from many years ago, when gold was priced at about 3 million VND/tael. Now seeing the price double, he decided to sell them for investment purposes. “When I sell gold, the purchase price for 999 gold is 6.44 million VND/tael. Selling 2 gold pieces, I earned 128.8 million VND, double what I paid” – Mr. Hung said.
Holding nearly 100 million VND to buy gold as a store of value, Ms. Bui Thi Huong (60 years old, living in district 10) revealed that she saw the rising price of gold and decided to use the money she had at home to buy. “If I don’t buy now, a few days later when the price goes up even more, I won’t be able to afford it. I have never seen gold prices rise so high and so quickly. In my experience, once gold goes up, it’s hard to come down, so buying gold is almost always profitable and rarely results in a loss” – Ms. Huong said.
People buying and selling gold when the price is high on the afternoon of March 4. Photo: U.P
In less than ten minutes, more than a dozen people lined up to buy and sell gold. The gold shop staff said that over the past 10 days, the number of customers coming to trade has been very high. This shop even limits the number of round and smooth gold rings sold, each person is only allowed to buy a maximum of 2 type 1 gold rings because there is not enough stock for customers.
According to Dr. Nguyen Tri Hieu, at this time, people can invest in gold to make a profit because gold is always a safe asset, but they should not “put all their eggs in one basket”. In particular, investors should not speculate on the gold market like “making money for fun” because the price of gold is volatile.
Kim Thanh gold shop (district 6) is also packed with customers as soon as it opens. “Gold prices have been rising every day, but that doesn’t mean there are no customers. Gold bars and gold rings are the most popular products. Sometimes when we run out of stock, we write an appointment date for customers to come back and pick up their purchases. We no longer accept deposits like before, and we don’t livestream gold sales because there is currently not enough stock to deliver to customers” – Mrs. Thuy, the owner of Kim Thanh gold shop, said.
Showing off 15 round and smooth type 1 gold rings, each weighing 4.9 grams, that she just bought at PNJ, Ms. Nguyen Thi Lien Hoa (living in Binh Tan district) said that this money was her Tet bonus along with savings throughout the year. “Normally at the beginning of the year, I usually save my Tet bonus in a bank account, but since the price of gold is currently high, I decided to buy gold. In the coming time, if the price of gold continues to rise, I can make a small profit” – Ms. Hoa said.
“The fever” continues
In an exchange with Phong Nguan Finance, Dr. Nguyen Tri Hieu, a financial expert and banker, said that the gold buying frenzy is likely to continue in the near future. The U.S. Federal Reserve (“Fed”) may not lower interest rates in 2024. Currently, they have not been able to achieve their desired target of 2% inflation, the unemployment rate is dropping, and the U.S. economy is still very hot, so inflation may return. The exchange rate has also increased, pushing up the price of gold. Meanwhile, the Vietnamese economy has not fully recovered. “The Vietnamese Government is trying to amend Decree 24 on gold market management. If it is amended, the gold market will be more stable. Otherwise, the price of gold will continue to follow an upward trend from now until the end of 2024” – Mr. Hieu said.
According to Mr. Hieu, there is still a significant amount of gold among the people, at least about 400 tons of gold. If we assume that people rush to buy gold, withdraw money from banks, and do not invest in real estate and stocks, it will definitely heat up the gold market even more. This affects many other industries, the economy, and even inflation.
Gold is considered a safe investment channel, a “hedge” against crises, inflation, and currency depreciation. For Vietnam, gold does not play a very important role in the country’s economic activities. Therefore, even though the price of gold on the world market has had some very high periods recently, in Vietnam, the value of gold has only gradually increased and remains relatively independent of the world price. Therefore, the negative impact is predicted to be limited.
Dr. Bui Trinh, an economic expert, believes that the high price of gold in the country is not necessarily due to the influence of the world political and economic situation. Currently, many people have money but do not know where to invest it, while savings interest rates are declining, and real estate and stocks are fluctuating… so they put their money into gold. However, this hiding place is not beneficial for the Vietnamese economy.
The increase in the price of gold contributes to the increase in foreign currency rates. Currently, the USD exchange rate in the “black market” reaches over 25,000 VND/USD. The increase in the USD exchange rate is partly due to a sharp increase in imports in the first 2 months of 2024, leading to increased demand for USD. The rising price of gold is one of the key indicators of a difficult economy, as money does not flow into production but is only stored in the gold and foreign currency markets. “If the price of gold rises too high, it will affect inflation and the supply chain of other goods. However, in terms of investment, there is no liquidation of assets to buy gold, so it does not affect monetary policy” – Dr. Trinh commented.
