Vietnamese people are no longer crazy about gold?

Lack of customers, many gold shops stop operating

Walking around the gold shops in the Ben Thanh market area (District 1, Ho Chi Minh City), Tan Dinh market (District 1) ..., it is clear that the number of customers coming to trade has decreased sharply. Most of the gold shop employees sit and press their phones or chat. A male security guard at a gold shop on Le Thanh Ton street (District 1) said that in the past, at noon, many people went to Ben Thanh market to shop; combined with the number of foreign tourists coming in and out, the area around the market was always bustling, even at times there were local traffic jams. However, now the atmosphere has completely changed. The number of vehicles entering the gold shops is sparse. Tourists and people going to the market have also decreased significantly. Many gold shops have not been able to survive the difficulties for a long time in the past few years since the Covid-19 pandemic broke out, leading to closures.

Mr. Truong Cam Cuong (owner of a gold shop in District 8, Ho Chi Minh City) admitted: "In more than 40 years of gold trading, I have never witnessed such a difficult business environment." Along with the closure of coffee shops, clothing stores, food stores, etc., gold shops in the city have also fallen. Gold shops around Xom Cui market (District 8, Ho Chi Minh City), Thiec market (District 11), or around Nhieu Tam gold street (District 5) that are still operating also have few customers.

Scenes of empty customers and "hanging" counters at gold shops in Ho Chi Minh City

Mr. Truong Cam Cuong said with regret: Before, every time he went to buy goods in Nhieu Tam area to sell, he had to go early in the morning to choose the products and come back in the afternoon to get the goods. However, now, it only takes 15 minutes to get the goods, no need to wait. This shows that "the house" (the gold production and trading unit) is also facing great difficulties. Some houses have recently announced a 10% reduction in product processing fees for gold shops to stimulate demand from small gold shops. "Logically, when many gold shops close, the ones that are still operating have the advantage of exploiting the customers of the other shops. However, this has not happened because people's demand for gold has decreased overall. The main customers of the shops used to be workers. Every month, workers receive their salary and spend 2-3 taels of gold, and when they need it, they quickly sell it to get money to take care of their lives. However, since the beginning of the year, a large number of workers have quit their jobs, leading to a decrease in the number of customers buying gold, making gold trading more difficult," Mr. Cuong analyzed.

Phu Nhuan Jewelry Joint Stock Company (PNJ) is one of the units with large revenue, a network of stores covering the whole country, but the recently announced business results report shows that net revenue decreased by 6.6% compared to the same period last year, down to 12,059 billion VND in the first 4 months of the year. Of which, retail revenue growth decreased by 5.7%, wholesale decreased by 23.3%, 24K gold decreased by 2.4%. As one of the large wholesale units of jewelry products for gold shops in the market, PNJ's wholesale revenue decreased sharply, showing that the situation of gold shops is even more difficult. PNJ's profit after tax also decreased by 0.7%, down to 859 billion VND.

SJC gold bar price is 10 - 11 million VND/tael higher than the world price .

Gold consumption falls by more than half

Ten years ago, Vietnam ranked 8th in the global gold consumption demand rankings. In 2012, Vietnamese people's gold consumption demand was about 100 tons, but by 2022, this number was 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, down to 17.2 tons. The decline in gold jewelry demand was partly due to the impact of the quarter's downward gold demand. Jewelry demand decreased by 18% compared to the same period in 2022, from 5.6 tons in the first quarter of 2022 to 4.6 tons in the first quarter of 2023. Demand for gold bars and coins also experienced a decline, from 14 tons in the first quarter of 2022, down 10%, to 12.6 tons in the first quarter of 2023.

Mr. Tran Thanh Hai, Chairman of the Board of Directors of SJC Phu Tho Gold and Gemstone Joint Stock Company, said that F1 gold traders (large businesses) have almost given up their jobs. Previously, when the gold market was bustling, the gold trading force was quite large, including F1, F2, F3... Those who traded gold continuously, creating market liquidity, prices fluctuated up and down, attracting capital from people to participate. Since Decree 24/2012 on the management of gold trading activities, the gold market has gradually narrowed. Gold trading in the market is no longer as vibrant as before, leading to many people not being interested in gold trading but shifting their investment capital to other fields, especially real estate. It is worth mentioning that even when the real estate market is in difficulty, this capital flow does not return to gold. In addition, people's income has also decreased, affecting the demand for gold. Not only workers but also people who used to want to buy 20-30 taels of gold have disappeared. Besides, fashion trends related to gold are also changing. Women today wear dozens of cement bracelets, unlike before when they only wore 5-7 bracelets, but the number of people wearing them is decreasing. Meanwhile, young people tend to wear 12K gold jewelry instead of 18K like before.

In particular, according to Mr. Tran Thanh Hai, the domestic gold price is "stubborn", not increasing or decreasing according to the world price, which also affects demand because the market lacks liquidity. For example, in the past few weeks, the world gold price has fluctuated within a wide range, increasing or decreasing from 100 - 150 USD/ounce, but SJC gold bars have only fluctuated around 67 million VND/tael, causing investors and speculators to lose their enthusiasm for buying and selling. From now until the end of the year, there will be a lot of information on the market that will cause prices to fluctuate abnormally. For example, in the US presidential election, the Democratic or Republican candidates will have very different fiscal policies, which will affect the rise or fall of precious metals. Not to mention the disadvantages of gold from the increase or decrease in US Treasury bond yields in the coming time. Faced with fluctuations in gold prices, those who want to invest in precious metals want to participate but there are no fluctuations domestically, so everyone is discouraged.

However, in a recent interview with the press, Mr. Shaokai Fan, the new CEO of the Asia-Pacific region and Global Head of Central Banks of WGC, still expressed his confidence in the Vietnamese people's love of gold: "In the context of global inflation and economic recession, Vietnamese investors still believe in gold as a reliable measure against inflation. Vietnamese people always favor gold as a way to protect against risks. Therefore, in the current situation, it is very likely that these factors will continue to encourage Vietnamese investors to pay attention to gold."

Gold ring purchase price is lower than the world

On June 9, the price of jewelry gold increased slowly, leading to a situation where the buying price was lower than the world price. Saigon Jewelry Company - SJC bought 4-number 9 gold rings at an increase of VND50,000/tael, buying at VND55.6 million, selling at VND56.65 million. The buying price of gold rings was VND300,000/tael lower than the world price, but the selling price was VND700,000/tael higher. The difference between the buying and selling price of gold rings was high, up to VND1.05 million/tael. The world gold price on June 9 increased by USD20/ounce, up to USD1,964/ounce. Meanwhile, the price of SJC gold bars was 20% higher than the world price, up to VND11.2 million/tael. The price of SJC gold bars on June 9 increased by 100,000 VND per tael. Saigon Jewelry Company - SJC bought for 66.5 million VND and sold for 67.1 million VND.

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