Unveiling the Hidden Dangers: Why Buying Gold on the Black Market is a Risky Venture

During a recent seminar, Mr. Phan Quốc Đông, Deputy Director of the Anti-Smuggling Investigation Department at the Customs Authority under the Ministry of Finance, highlighted the enduring allure of gold for smugglers. Gold’s high value, portability, and ability to retain worth during crises like wars or inflation make it a prime target. Its global liquidity and the long-standing tradition of gold hoarding among Vietnamese people further fuel market demand.

Mr. Đông noted that Vietnam’s 4,000 km border, with only 157 official crossings and 88 checkpoints, creates significant vulnerabilities for gold smuggling. When domestic prices surge or demand spikes, the risks escalate dramatically.

In response, the Customs Authority has implemented robust measures, including Plan 2088 and the directive issued on November 4, prioritizing anti-gold smuggling efforts. Despite intercepting numerous cases, each typically involves substantial quantities, such as 10 kg on land routes. Collaboration with other agencies could further amplify the impact of these operations.

For sustainable solutions, the Customs Authority advocates revisiting regulatory policies to alleviate smuggling pressures. Recommendations include adopting international practices like taxing gold sales, ensuring transparency in jewelry gold operations, and effectively implementing new regulations such as Decree 232 and Directive 35. To date, no formal gold exports have been recorded under these frameworks. Since the year’s start, 65 import declarations (USD 26 million) and 22 export declarations (USD 4.2 billion) have been filed, primarily for processed gold.

Mr. Đông emphasized the urgent need for detailed guidelines to translate gold management policies into actionable practices, fostering market transparency and easing export-import bottlenecks. This would also expand legal options for citizens.

From a domestic market perspective, Mr. Nguyễn Đức Lê, Deputy Head of the Domestic Market Management Division at the Department of Market Management and Development under the Ministry of Industry and Trade, observed that supply generally meets demand for crafted gold, jewelry, and consumer gold. However, gold bars occasionally face import restrictions, particularly during periods of high domestic demand, creating supply bottlenecks that drive prices upward. This stems from Vietnamese traditions of gold gifting during savings, weddings, and other occasions, sparking speculative buying frenzies.

Collaborating with the State Bank of Vietnam, the Ministry of Industry and Trade identified seven critical issues in gold bar trading management:

– Lack of centralized data: Retailers operate without online connectivity to government databases, hindering transaction tracking.

– Quality control challenges: Despite state oversight, counterfeit gold persists in the market.

– Opaque invoicing: Cash transactions without receipts lead to underreported revenues and tax losses.

– Fragmented oversight: Inadequate inter-agency coordination, data sharing, and early warning systems, coupled with infrequent inspections and delayed responses to price fluctuations.

– Significant black market price gaps: Arbitrage opportunities encourage smuggling and tax evasion.

– Inconsistent pricing: Fluctuating display and selling prices, with hoarding exacerbating management difficulties, especially for privately held crafted gold.

– Panic buying: Public gold rushes during price surges complicate regulatory efforts, enabling opportunistic price manipulation by retailers.

Mr. Nguyễn Đức Lê also warned consumers about black market risks. Uncertified gold lacks quality assurance, and transactions without receipts expose buyers to fraud. Additionally, black market prices often exceed legitimate rates, with sudden price shifts causing immediate losses.

The Ministry of Industry and Trade further cautioned against counterfeit gold, substandard products, and physical risks associated with unsupervised transactions. Black market hoarding undermines state price controls, destabilizes currency confidence, and erodes trust in financial systems.