How the gold price hike is affecting the daily life of Saigonese, from savers who keep their assets in gold to couples who are about to get married
All That Glitters Is Not Gold
By Quynh Thu
Higher gold prices: More people will be economically vulnerable How the gold price hike is affecting the daily life of Saigonese, from savers who keep their assets in gold to couples who are about to get married
Believe it or nor, automobiles in Saigon are becoming incredibly cheaper these days, which may be a golden time for some Saigonese to bring their dream cars home.
This is just a hoax, you say. But the claim of cheap car prices is true in a sense. Yes, it’s true, if you look at cars from the viewpoint of … gold prices! (For the current automobile market, please turn to our Cover Story on page 22).
The following story was overheard at an office in downtown HCM City over the weekend.
During a chat among colleagues in that office, a man said, “We may consider buying a car now if we converted all of our savings in dong or U.S. dollars into gold… 10 years ago.”
The guy went on by taking the example of the four-seat compact car Hyundai Getz whose price is US$17,000 apiece. “That means you need only 11 lng (taels) of gold in hand to get the car.” Lng, or its English equivalent “tael,” is a gold unit commonly used in Vietnam for gold bars weighing approximately 37.5 grams each.
Naturally, the problem is how to have these 11 taels of gold. In reality, that amount may be within the reach of quite a number of households that have been faithful to keeping their savings in gold. The sharp rise on the global gold market has sent gold keepers’ assets soaring.
Gold price rocketed from around US$255 an ounce in September 2000 to more than US$1,300, or a five-fold increase, as seen last week. Four years ago, in October 2006, the price was at US$600 per ounce.
In Vietnam, a tael of gold was priced at some VND22 million a year ago, and VND27 million in January. These days, it is just shy of VND33 million!
The lackluster performances of the world economic powerhouses such as the United States, the European Union and Japan have prompted Vietnamese money savers to be dubious about those strong currencies as a means of savings. In such a context, gold comes to the throne.
Last Saturday, Dong A Bank (EAB) launched its ATM capable of selling gold directly to card holders in District 5.
Yet this piece of news about the first “goldsmith” ATMs in the country is of little interest to Saigonese in general. Aside from those who have accumulated their assets in gold, the majority of Saigonese seem to suffer from the gold price hike. Higher gold prices will soon push up prices of commodities and inflation.
In the context of a struggling world economy, rising inflation in Vietnam will to a certain extent derail government efforts to bring the national economy back on track.
Among the contingent of Saigonese who show a growing apprehension of exponentially high gold prices are marrying couples and their parents.
Thanh Vu, 37, who will enter the wedlock in December, says that gold jewelry for the wedding ceremony is now a burden to him and his wife-to-be.
Some relatives used to congratulate to brides and grooms on their marriage using gold rings as wedding gifts. But this habit has almost gone now as a ring weighing a ch (one-tenth of a tael) costs more than VND3 million (which is too generous as a wedding gift)!
Gold prices breaking record after record also shatter many newly-weds’ hope for their own houses. You may argue that in a tumultuous economy, realty prices would normally go down. You’re right, but this pertains more to couples’ “liquidity,” or to put it another way the affordability of a house or an apartment, than the price itself.
Relatives’ fading preference for gold rings as wedding gifts is not the only exception. Higher gold prices have also made quotation in gold no longer in vogue in realty transactions. In Saigon, and other cities in Vietnam as well, gold used to be a favorite method of payment in estate trading. To avoid “dollarization” in the economy, the Government has banned quotations in the greenback on official occasions. No similar prohibition against the use of gold as a method of payment in house deals has been in force. However, a few years ago when gold price kept rising, this habit began to lose grounds.
In the late 1970s, when the newly united Vietnam was isolated from the outside world, gold was considered “the ultimate mode of savings.” According to archives, one of the strange jobs emerging at the time involved traders going around town to hunt for “rng vàng, bc vn, tin xa” (literally “gold teeth, broken silver, antique coins”). This weird job has disappeared since Vietnam opened its door to the world at large.
Now as gold prices are on their peak, what will be the job to become history down the line?