“Investors Lose Hundreds of Millions in a Matter of Days: The Risky Business of Gold”

On May 23, during a discussion on the country’s socio-economic situation in the early months of 2025, National Assembly Deputy Ha Sy Dong from Quang Tri Province urged the government to pay special attention to the gold market.

According to the government’s report, gold prices have been on a constant rise recently. Deputy Dong noted that while gold was once considered a “safe haven,” it is now a volatile asset.

“The media has reported cases of people losing hundreds of millions in just a few days due to the unpredictable nature of this asset. A surge in gold prices will have far-reaching consequences, affecting not just the financial sector but also the lives of ordinary citizens,” he emphasized.

While those who hold gold will benefit from the price increase, we cannot ignore the negative impacts. Citing data from the General Statistics Office (now the Statistics Office), he pointed out that in 2024, gold prices rose by about 13.78% while the consumer price index (CPI) increased by only 3.2%. This indicates a link between gold prices and consumer goods prices.

Deputy Dong highlighted that rising gold prices will lead to significant inflationary pressure. Consumer goods will become more expensive as the higher gold value impacts production and distribution costs. This, he argued, will result in reduced purchasing power for citizens, especially those with lower incomes, while also increasing the cost of living for the majority of the population.

Referring to a warning from the State Bank of Vietnam (SBV) about the potential for runaway inflation if gold prices continue to soar, Deputy Dong expressed concern that this could lead to skyrocketing prices of essential goods like food, fuel, and construction materials, negatively affecting the economy’s health.

“We must not view gold merely as a traditional investment asset; it is also a barometer of the global economy’s health, directly influencing our nation’s economy. It is crucial for Vietnam to proactively develop a long-term strategy to stabilize the economy, avoid being caught in gold speculation waves, and ensure the country’s sustainable development,” Deputy Dong stated. He recommended that the government and the SBV establish a clear gold management mechanism to minimize volatility and encourage investment in production rather than volatile assets.

In an earlier report to the National Assembly, the SBV noted that the domestic gold bar price had moved in tandem with the world gold price. The gap between domestic and world gold prices was controlled and maintained at a range of 3-5 million VND/tael (equivalent to about 5-7%) at the beginning of April 2025; at some points, it was only about 1 million VND/tael (about 1-2%) in early 2025. However, by April 23, the difference had widened to 14.48 million VND/tael (13.62%).

According to the SBV, the main reason for the faster increase in domestic gold bar prices compared to world prices, and the widening gap since the beginning of April 2025, was due to expectations of further increases in world gold prices amid unpredictable tax policies of the Trump administration, the uncertain monetary policy path of the Fed, and geopolitical tensions.

Another factor was the lack of additional gold bar supply in the market since the beginning of 2025, as the foreign exchange and gold markets had been relatively stable, and the SBV had not had to intervene.

The SBV’s report also acknowledged that “there may be individuals and enterprises taking advantage of the market volatility to speculate, push prices, and seek profits.”

Despite the high domestic gold prices, these fluctuations have not yet affected monetary policy management and macroeconomic stability. The SBV stated that it would continue to closely monitor the domestic and international gold markets, coordinate with relevant agencies to enhance management, and take measures to stabilize the gold market within its authority.