Is Gold Still a Shining Investment Worth Queuing For?

It’s been a month since SJC and four banks started selling gold bars to stabilize the market, and the SJC gold price has remained stagnant, with buying and selling prices fixed at 74.98-76.98 million VND per tael. The rush to buy gold has subsided as all four banks and SJC have switched to online gold sales, although monitoring the price for buying opportunities remains challenging.

Meanwhile, gold rings, which are not subject to the same stabilization measures as gold bars, are also difficult to purchase. Gold businesses are releasing limited quantities, and the purchase limit has decreased from three rings per transaction to just one. Furthermore, most small gold shops no longer have rings available for sale.

The price of gold rings is approaching that of gold bars, with each four-nine gold ring at SJC sold for 75.7 million VND on July 5, while the buying price was 74 million VND.

Many investors are now wondering if they should buy gold in the second half of 2024.

According to a report on investment strategy for the second half of 2024 by AFA Capital Vietnam, released in June, gold (including gold bars and rings) has increased by 18.85% since the beginning of the year until June 3. If we consider the period from the beginning of 2023, the precious metal has risen by 35.77%. Meanwhile, the world gold price has also increased by 12.79% from the beginning of the year to the beginning of June.

On the other hand, statistics from FIDT Asset Management and Investment Consulting Company on the performance of various investment channels in the first six months of 2024 show that gold rings have been the most profitable investment channel, with a return of 21.34%, while gold bars have only increased by 4.03%. Compared to other investments, the profit margin from gold rings is significantly higher, with bank deposits yielding only 2.42%, USD around 4%, corporate bonds over 7.8%, and stocks over 10%… These figures underscore the substantial investment opportunities that gold buyers have enjoyed.

However, for the second half of 2024, most recommendations regarding gold focus on the notion that the precious metal has lost its appeal and carries more risks, despite the current high price.

AFA Capital Vietnam predicts that gold bar prices will stabilize as the State Bank of Vietnam increases supply through its sale of stabilizing gold for over a month. Meanwhile, gold ring prices will depend on world gold prices.

“The world gold price is expected to remain on an upward trend as gold demand remains stable, particularly from China and central banks. However, the pressure from geopolitical conflicts has eased slightly since the end of April. We assess the outlook for gold as less attractive in the second half of 2024, especially after the news of increased SJC gold supply from the State Bank of Vietnam, with four state-owned commercial banks directly selling gold,” AFA Capital Vietnam noted in its report.

Mr. Ta Thanh Tung, Head of Research and Consulting at FIDT Real Estate Company, believes that gold still has some growth potential in the short term for the remaining six months of the year, but the room for growth is limited, and gold is no longer an appealing investment option.

Therefore, for the second half of 2024, gold should still be part of an investment portfolio, but it should be considered a defensive asset, with a holding ratio not exceeding 5%. In the long term, as the global economy improves, gold prices will stabilize, and investors should focus on other assets that will likely be more attractive.

Sharing a similar view, Mr. Nguyen The Minh, Director of Analysis at Yuanta Vietnam Securities Company, opined that gold is a safe-haven asset for investors during times of economic and political instability. However, we have now passed through those turbulent phases, so this investment channel will no longer be sought after.

“Although the instability at this time is not over, gold will only increase sharply when the instability intensifies. In the coming period, gold should only be a defensive channel, in case of other crises. Don’t bury too much capital in gold. Its best days are behind it, and there may only be a few occasional gusts of wind left,” said Mr. Minh.

Regarding other investment channels, experts predict notable changes that investors should be cautious about in the second half of 2024. Among them, the savings deposit channel is expected to recover as deposit interest rates show slight increases and liquidity tightens. However, the recovery will likely fall short of expectations. Savings deposits will continue to be an unattractive channel in the latter half of the year but will help balance capital flow.

Corporate bonds are also anticipated to recover well, but the supply will not be abundant as this channel relies heavily on trust. Both businesses and investors are still somewhat apprehensive. Corporate bonds are recommended as a channel that non-specialist investors should avoid in the short term, while professional investors may consider it an option.