Informal gold trading thrives worriedly in Vietnam

Le Toan, a resident in District 5 of HCMC, shared his experience of selling three taels of SJC gold. He found that while larger jewelry stores were reluctant to purchase his gold without a receipt, he was able to sell it at a higher price on social media platforms. “I sold the gold for VND88 million (US$3,460) per tael, which was VND1 million ($39) more than what the businesses were offering on October 23,” Toan said. “It was a simple transaction. We met at a coffee shop, and the buyer only checked the gold without requesting any certification.”

Many jewelry stores are now engaging in informal gold trading, buying and selling SJC gold without the necessary licenses although at present only 22 banks and 16 businesses are permitted to carry out gold bar transactions.

An employee at a jewelry store on Nguyen Dinh Chieu Street in District 3 revealed that they purchase all types of gold, including SJC gold bars, at prices significantly higher than those listed by authorized sellers (by VND600,000–1 million). “We can sell any amount, and if you're buying more than 20 taels, just give us a one-hour notice. We accept both cash and money transfer. There is no official bill for the purchase but an informal receipt so that the gold can be sold here later,” the employee said.

Social media platforms like Facebook have become hotbeds for gold trading, with numerous groups of thousands of members, dedicated to buying and selling gold. These groups facilitate transactions for SJC gold, gold bars, and gold rings from various brands, often at prices above market value. They even offer at-door delivery services and affirm that they can satisfy any demands for gold amount.

Experts in the field commented that it is these online gold purchases for later-on sales that have created more trouble for people with the real need to buy gold online. More seriously, buying gold via these informal channels or from unauthorized sources carries significant risks, including receiving counterfeit gold, low-quality gold, or losing money in scams.

The HCMC Gold Business Association has also warned the public about the dangers of purchasing gold from unauthorized sources. The association advises consumers to transact only with businesses that possess the necessary licenses to sell gold. Purchasing gold, such as gold bars or gold jewelry, without proper documentation can lead to legal complications, as authorities may classify such transactions as involving smuggled or untraceable goods.

Deputy Director Nguyen Duc Lenh of the State Bank of Vietnam's HCMC branch echoed these concerns, urging the public to be cautious when seeking assistance with gold purchases. He cautioned against sharing personal information with unauthorized individuals, as this could lead to identity theft or other fraudulent activities or even robberies.

Dr Nguyen Tri Hieu, a finance and banking expert, commended the State Bank of Vietnam's efforts to stabilize the gold market but noted that supply shortages persist. He suggested that the government could further stabilize the market by delegating gold importation to reputable businesses while maintaining regulatory oversight. Additionally, he advocated for the removal of the state monopoly on SJC gold, arguing that this would increase supply, stabilize the gold market, and promote market transparency.

At the 8^th session of the 15^th National Assembly, the issue of banking, specifically the state management of the gold and foreign exchange markets, has been among the top priorities for questioning. In response, the State Bank of Vietnam submitted a report to the National Assembly detailing its efforts to oversee the gold market.

The report summarized the implementation of Decree No.24/2012-ND-CP on gold trading, highlighted the Vietnam State Bank’s comprehensive approach to addressing the significant gold price gap and calming the market. This includes coordinating with various ministries and local authorities to strengthen oversight of gold trading activities.

The State Bank of Vietnam also mandates that credit institutions and gold trading enterprises strictly adhere to legal regulations and maintain accurate records.

Furthermore, the Vietnam State Bank has collaborated with the Ministry of Public Security, the Government Inspectorate, the Ministry of Industry and Trade, and the Ministry of Finance to conduct joint inspections of gold trading activities. The results of these inspections are currently being finalized. To increase the supply of SJC gold in the market, the Vietnam State Bank has organized auctions for direct gold sales.

Thanks to these concerted efforts and effective coordination among government agencies, the price differential between domestic and international gold has been brought under control, with a current gap of approximately 5-7 percent. Notably, the stabilization of the gold market has positively contributed to the foreign exchange market, exchange rates, and overall macroeconomic management.