Download - Vietnam Gold Market
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VIETNAM GOLD MARKET
International Finance - Group 2Tran Cong Tuong
Le Xuan Long
April - 2011
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AGENDA
Overview of Vietnam gold market
Gold in eyes of government
Gold in eyes of producers
Gold in eyes of consumers (Vietnamese people)
Gold in eyes of investors
Gold in eyes of lovers
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Overview of Vietnam Gold Market
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Gold Demand of Vietnam
Demand in 2010*: 81.4 tons ($ 3.232 million)
– Bar: 67.0 tons ($ 2.674 million)
– Jewelry: 14.4 tons ($ 558 million)
Gold kept among Vietnamese: around 500 tons ($ 19.852 million) (unofficial data)
World’s largest gold consumer (in term of per capita income)
– India and China: world's largest gold consuming (in term of value)
* Source: GFMS, WGC
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Gold Bar Demand (Q4 2010 vs Q4 2009)
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Jewelry Demand (Q4 2010 & Q3 2010)
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Import & Export
Strictly control by SBV
– Need official permits
– Quota
– Only for big gold firms
Official statistic: 1998 – Sep. 2010
– Export: 268.86 tons (22.4 tons per year)
– Import: 339.86 tons (28.3 tons per year)
Illegal import of gold (smuggling): 20-40 tons per year (unofficial data)
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Vietnam Gold Price (04/2010 – 04/2011)
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Vietnam Gold Price in Ten Years
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World Gold Price in Ten Years
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Return on Investment – Feb/2011 (monthly)
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Gold in Eyes of Government
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Regulating Gold Market - Objectives
Stabilize macro-economy (inflation)
Utilize gold kept among Vietnamese
Eliminate gold as a means of payment in the economy
Control and stabilize gold market
Prevent gold smuggling
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Current Management in Gold Market
Shut down local gold exchanges
Ban gold trading on foreign accounts
Strictly control import/export gold
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Government's Resolution for Gold Market (Resolution 11/NQ-CP)
Stopping gold mobilizing and lending by credit institutions
– Still lend gold for producing jewelries
Strictly controlling the gold market
Closely monitoring & forecasting fluctuations of international gold price, gold supply & demand in domestic market
Submitting Decree on gold management and trading for certain major gold importers
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Government's Resolution for Gold Market (cnt.) (Resolution 11/NQ-CP)
Prohibiting gold bar trading
Inspecting speculation, hoarding and manipulation in gold market
Revising the regime of administrative penalties against violations in gold trading
Enhancing supervision and dealing with violations of gold trading of institutions and individuals
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Gold in Eyes of Producers
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Gold Producers
Gold companies
– About 20 big firms: SJC, PNJ, SBJ, AJC…
Gold shops
– Thousands of gold shops in Vietnam
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Gold Products
Gold bar
Jewelry
– Ring
– Earrings
– Bracelet
– Pendant
– Chain
– Necklace
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Gold Bars
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Gold Jewelry
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Suggestions for Gold Management *
Not forbid the gold bar trading, just tough conditions
– Charter capital: 30 billion VND
– Annual revenue: 500 billion VND
Physical gold bar trading to be limited, gold trade on account
Establish national gold exchange
Gold trade account in foreign countries
Raise import tax (0%->0.5%), decline export tax (10%->0.5%)
* Source: Vietnam Gold Traders Association
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Suggestions for Gold Management (cnt.)
Create new forms of gold trading
– Physical gold trading (current)
– Exchange-traded funds (ETFs),
– Investments through accounts
– Gold derivatives
Sustainable and long-term policies for gold market
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Gold in Eyes of Consumers
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In Eyes of Vietnamese People
Gold is very special to Vietnamese people
Any precious thing is considered as gold (quí như vàng)
– Silent is gold (Im lặng là vàng)
– Girl’s virgin is considered as gold (Mất cái ngàn vàng )
Gold jewelries are used in special occasions:
– Gifts for wedding
– Tet holiday
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In Eyes of Vietnamese People (cnt.)
Gold was a common unit of price
– Real estate transaction
– Motorbike transaction
Gold is a great stored of value
They keep track of gold price so closely
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Why Does Vietnamese Keep Gold?
Gold price tends to rise over time (a stored of value)
Gold divided into extremely small portions, easily transported & kept for a long time
Gold purchased & exchanged easily
Dong devaluation
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Gold in Eyes of Investors
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Who are Gold Investors?
Central banks
Gold speculators
Financial institutional organizations
Gold producers
Private investors
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Why Do We Invest in Gold?
Gold as portfolio diversifier
Gold as an inflation hedge
Gold as dollar / VND hedge
Gold as safe haven asset
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Investment Vehicles in Gold Market
1. Gold bars / coins
2. Gold exchange-traded products
3. Gold accounts
4. Gold certificates
5. Gold futures and options
2, 3, 4 and 5 are forbidden, 1 is going to be prohibited in Vietnam
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Factors Influenced Gold Price
Central banks’ decisions
Inflation
Interest rates of USD, EUR
US economy
Oil price
Crisis
Demand & Supply
Investor’s psychology
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Investor’s Psychology - Crazy for Gold
Crazy for buying / selling gold
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Investor’s Psychology - Crazy for Gold (cnt.)
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Gold Investment Strategies
Fundamental analysis
Technical analysis
Gold versus stocks
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Risks Associated with Investing in Gold
Market risk
Legal risk
– Changed policy
– Foreign gold account
Risks related to quality of gold
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Gold in Eyes of Lovers
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Lovers’ Conversation
Male: Will you marry me?
Female: How much gold do you have?
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Q & A
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Preferences
World Gold Council, http://www.gold.org/
http://www.kitko.com
http://www.sjc.com.vn/
Saigon times http://www.thesaigontimes.vn