Are Vietnamese people no longer obsessed with gold?

Due to a lack of customers, many jewelry stores have ceased operations.

A stroll around gold shops in the Ben Thanh Market area (District 1, Ho Chi Minh City), Tan Dinh Market (District 1), etc., reveals a significant drop in customer traffic. Most gold shop employees are busy on their phones or chatting. A male security guard at a gold shop on Le Thanh Ton Street (District 1) said that previously, many people shopped at Ben Thanh Market at lunchtime; coupled with the influx of foreign tourists , the area around the market was always bustling, even experiencing localized traffic jams at times. But now the atmosphere has completely changed. The number of vehicles entering the gold shops is sparse. Tourists and shoppers have also decreased considerably. Many gold shops have been unable to survive the difficulties of the past few years since the Covid-19 pandemic, leading to closures.

Mr. Truong Cam Cuong (owner of a gold shop in District 8, Ho Chi Minh City) admitted: "In over 40 years of gold trading, I have never witnessed such difficult business conditions." Along with the closure of coffee shops, clothing stores, and restaurants, gold shops in Ho Chi Minh City are also declining. Those gold shops around Xom Cui Market (District 8, Ho Chi Minh City), Thiec Market (District 11), or around the Nhieu Tam gold street (District 5) that remain open are experiencing very few customers.

The scene at gold shops in Ho Chi Minh City is one of deserted customers and empty counters.

Mr. Truong Cam Cuong recounted with regret: "Previously, every time I went to buy goods in the Nhieu Tam area to resell, I had to leave early in the morning to select products and return in the afternoon to pick them up. But now, it only takes 15 minutes to get the goods, without having to wait." This shows that the "gold wholesalers" (units involved in the production and trading of gold) are also facing significant difficulties. Some wholesalers have recently announced a 10% reduction in processing fees for gold shops to stimulate demand from smaller gold shops. "Logically, with many gold shops closing, those that remain should have the advantage of exploiting the customers of the others. However, this hasn't happened due to a general decline in demand for gold. Previously, the shop's main customers were factory workers. Each month, workers would set aside a sum of money to buy 2-3 grams of gold, which they could quickly sell when needed to cover their living expenses. But since the beginning of the year, the number of workers quitting their jobs has increased, leading to a decrease in the number of gold buyers and making the gold business more difficult," Mr. Cuong analyzed.

Phu Nhuan Jewelry Joint Stock Company (PNJ) is one of the companies with high revenue and a nationwide store network. However, its recently released business results show a 6.6% decrease in net revenue compared to the same period last year, falling to VND 12,059 billion in the first four months of the year. Specifically, retail sales decreased by 5.7%, wholesale sales by 23.3%, and 24K gold sales by 2.4%. Despite being a major wholesaler of jewelry to gold shops, PNJ's significant decline in wholesale revenue indicates that gold shops are facing even greater difficulties. PNJ's after-tax profit also decreased by 0.7%, to VND 859 billion.

The price of SJC gold bars is 10-11 million VND/ounce higher than the world price.

Gold consumption has fallen by more than half.

Ten years ago, Vietnam ranked 8th globally in gold consumption demand. In 2012, Vietnamese people consumed approximately 100 tons of gold, but by 2022, this figure had dropped to only 43 tons. According to the World Gold Council (WGC), in the first quarter of 2023, Vietnam's gold demand decreased by 12% compared to the same period last year, to 17.2 tons. The decline in demand for gold jewelry is partly due to the downward impact on overall gold demand in the quarter. Jewelry demand decreased by 18% compared to the same period in 2022, from 5.6 tons in Q1 2022 to 4.6 tons in Q1 2023. Demand for gold bars and coins also declined, from 14 tons in Q1 2022 down 10% to 12.6 tons in Q1 2023.

Mr. Tran Thanh Hai, Chairman of the Board of Directors of SJC Phu Tho Gold, Silver and Gemstone Joint Stock Company, said that the F1 gold trading group (large-scale businesses) has almost abandoned the profession. Previously, during the boom period of the gold market, there was a large number of gold traders, including F1, F2, F3… These traders continuously bought and sold gold, creating market liquidity and price fluctuations that attracted capital from the public. Since Decree 24/2012 on the management of gold trading activities, the gold market has gradually shrunk. Gold transactions are no longer as active as before, leading many people to lose interest in gold trading and shift their investment capital to other fields, especially real estate. Notably, even when the real estate market faced difficulties, this capital did not return to gold. Furthermore, people's incomes have also decreased, affecting the demand for gold. Not only are workers absent, but so are people who previously needed to buy 20-30 taels of gold. Furthermore, fashion trends related to gold are changing. Women today wear sets of gold-plated bracelets, sometimes a dozen or more, unlike before when it was just 5-7 bracelets, but the number of people wearing them is decreasing. Meanwhile, young people tend to wear 12K gold jewelry instead of 18K as before.

In particular, according to Mr. Tran Thanh Hai, the fact that domestic gold prices remain stagnant, not fluctuating in line with world prices, also affects demand due to a lack of liquidity in the market. For example, in the past few weeks, world gold prices have fluctuated widely, rising and falling by 100-150 USD/ounce, but SJC gold bars have only fluctuated around 67 million VND/ounce, causing investors and speculators to lose interest in buying and selling. From now until the end of the year, there is much market information that will cause unusual price fluctuations. For instance, the US presidential election race, where Democratic or Republican candidates will have very different fiscal policies, will impact the upward or downward movement of the precious metal. This is not to mention the disadvantages gold faces from how US Treasury bond yields fluctuate in the coming period. Given the volatility of gold prices, those who want to invest in the precious metal are discouraged by the lack of domestic price movement.

Nevertheless, in a recent press interview, Shaokai Fan, the new CEO for Asia Pacific and Global Head of Central Banking at the WGC, expressed confidence in the Vietnamese people's love for gold: "In the context of global inflation and economic recession, Vietnamese investors still trust gold as a reliable hedge against inflation. Vietnamese people have always favored gold as a way to protect against risks. Therefore, in the current situation, it is very likely that these factors will continue to drive Vietnamese investors to focus on gold."

The price for buying gold rings is lower than the world price.

On June 9th, the price of gold jewelry increased slowly, resulting in a situation where the buying price was lower than the world price. Saigon Jewelry Company (SJC) increased the buying price of 9999 gold rings by 50,000 VND/ounce, buying at 55.6 million VND and selling at 56.65 million VND. The buying price of gold rings was 300,000 VND/ounce lower than the world price, but the selling price was 700,000 VND/ounce higher. The difference between the buying and selling price of gold rings was high, reaching 1.05 million VND/ounce. The world gold price on June 9th increased by 20 USD/ounce, to 1,964 USD/ounce. Meanwhile, the price of SJC gold bars was 20% higher than the world price, reaching 11.2 million VND/ounce. On June 9th, the price of SJC gold bars increased by 100,000 VND per tael. Saigon Jewelry Company (SJC) bought gold at 66.5 million VND and sold it at 67.1 million VND.

Source link: https://thanhnien.vn/nguoi-viet-khong-con-me-vang-185230609130347326.htm