Heavy losses from storing gold in a safe.

Those who kept gold in safes for the past five years have lost an average of about 11 million VND per tael (approximately 37.5 grams).

According to data from the State Bank of Vietnam's Foreign Exchange Management Department, recently cited by the press, gold bullion transactions on the market are currently at a low level. The average daily volume of gold bullion transactions has only reached about 10,000 taels recently, a decrease of up to 75% compared to the beginning of 2013.

In particular, the amount of gold deposited in safekeeping at credit institutions has decreased sharply. The total amount of gold deposited at banks in 2012 was approximately 160 tons, but now only about 2.86 tons remain in safekeeping.

Sending gold to a bank is both expensive and inconvenient.

So where did all that gold go when it was withdrawn from the banks? According to the explanation from the State Bank of Vietnam's Foreign Exchange Management Department, the downward trend is mainly due to the fact that gold held by the public has been strongly converted into Vietnamese dong for investment, production, business, and consumption.

From a business perspective, Mr. Nguyen Van Chinh, the owner of a gold trading establishment in District 2, Ho Chi Minh City, believes that people withdrawing gold from the banking system is understandable. This is because, since 2013, the State Bank of Vietnam has ceased gold deposit and lending activities across all credit institutions. Since then, the gold people deposit at banks is only held in custody; depositors do not earn interest and also incur deposit fees.

"In reality, only those with small amounts of gold, who keep it like a piggy bank, choose to deposit it in a bank. For those who buy gold for investment or business purposes, no one would deposit gold in this way," Mr. Chinh analyzed.

Ms. Tran Thi Hang, residing in Phu Nhuan District,Ho Chi Minh CityPreviously, people used to deposit gold at banks, but now they no longer do so because of the fees. “Not to mention, even if you accept the fees for depositing gold, withdrawing it is very complicated. You have to withdraw it at the same branch where you deposited it, and you have to notify them at least half a day to a day in advance. Therefore, there are times when the price of gold is high, and you want to withdraw it to lock in profits immediately, but you can't, and you miss the opportunity,” Ms. Hang shared.

Heavy losses

Dr. Nguyen Tri Hieu, a banking and finance expert, believes that there are currently no accurate statistics on what people use the gold they withdraw from the banking system for. However, one thing is certain: no one would withdraw a large amount of gold from a bank (for example, several tens of ounces) and then store it in a safe or hide it under their bed.

"They will convert that gold into cash, then invest it in real estate, stocks, dollars, etc.," Dr. Hieu commented.

Sharing the same view, Mr. Duong Anh Vu, a gold industry expert, analyzed that those who owned a lot of gold, after selling it for cash, invested the capital in various channels such as dollars, real estate, stocks, or sold gold to lend or do business.

Because if a gold investor had held onto gold for the past five years, they would certainly have lost money. Looking at the history of gold prices, this is very clear: In 2012, the price of gold was 48 million VND/ounce, even reaching 50 million VND at one point, but now it has fallen to below 37 million VND/ounce.

Meanwhile, many other investment channels have yielded quite good returns. For example, the dollar exchange rate in 2012 was around 21,300 VND/USD, and now it is approximately 22,760 VND/USD. In the past five years, land prices in District 2 and District 9 have increased by up to 300% in some areas. Similarly, the VN-Index was 300 points in 2012 and has now risen to 800 points, meaning that if investors invested in the stock market, they could have made at least a profit of over 150%.

"Overall, considering only the four investment channels—gold, dollars, real estate, and stocks—the dollar yielded the least profit, but it was still better than gold. Clearly, if an investor bought gold at the record high of nearly 50 million VND/ounce and stubbornly held onto it until now, they would have suffered heavy losses," Mr. Vu emphasized.

Mobilizing gold is not easy.

Although many people have invested in other areas after withdrawing their gold from banks, many experts believe that the amount of gold held in people's safes is still very large. According to the Vietnam Gold Business Association, the estimated amount of gold held by the public is still very large, about 500 tons (13.3 million taels, equivalent to over 20 billion USD). Therefore, this association has proposed that the State Bank of Vietnam establish a national gold exchange; issue gold certificates or gold bonds to mobilize gold held by the public to avoid wasting this gold.

Recently, the Government Office issued another document conveying the Prime Minister's opinion, requesting the Governor of the State Bank of Vietnam to continue focusing on research and developing appropriate solutions to mobilize foreign currency and gold held by the public for investment and development.

Many experts and businesspeople believe this is the right policy to create resources for economic development, but mobilizing these resources from the people is not easy. One of the important reasons why people hold gold and USD is due to concerns about the devaluation of the domestic currency.

Therefore, to mobilize gold from the people, so that they don't hide their hard-earned gold under their beds, they must be reassured by the domestic currency. When they have more confidence, they will sell their gold and deposit the money in banks to earn interest or invest in production and business.

In addition, consideration should be given to raising interest rates on USD and gold deposits. According to Dr. Nguyen Tri Hieu, an economic expert: "If people deposit gold without interest, or even with negative interest rates due to fees, no one will be enthusiastic anymore." Specifically, to mobilize these resources, market principles should be applied instead of administrative measures; that is, an increasingly favorable business environment must be created so that people have more confidence to invest their money.

According to VNN