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As Currency Depreciates, Vietnamese and Thai Investors Flock to Gold

July 3, 2024

The rush to buy gold in Vietnam and Thailand hasn’t let up despite high prices and long lines.

Last month, the Vietnamese government launched a scheme to drive gold prices lower.

The State Bank of Vietnam (SBV) sold gold bars directly to four state-owned commercial banks at 78.98 million dong (Vietnam's currency đ worth around USD 3,103.00) per tael (37.7994 grams). The banks then made the gold bars available to the public for no more than 79.98 million dong. 

With this price fix, banks are selling gold about 1.2 percent lower than market prices.

At the time, banks reported queues of up to 50 people at a time as people lined up to take advantage of the pricing.

Banks quickly ran out of gold and had to limit customers to one tael. According to reports, Vietnamese banks sold two tons of gold in one week.

A month later, the lines are gone, but only because banks have initiated an online registration system. According to a report in the South China Morning Post, slots fill up within minutes each day.

According to the Post report, the government fix “calmed” the gold price initially, but it has remained elevated “because buyers are still worried about plunging savings interest rates, the frozen real estate market, and the ongoing devaluation of the dong.”

During a conference last month, Vietnam Gold Traders Association vice-chairman Huynh Trung Khanh said gold bars have become the “major channel of investment in Vietnam.” 

Currency depreciation is a significant problem in the Southeast Asian country. The dong lost about 10 percent of its value compared to the dollar since the tail-end of the pandemic. Meanwhile, the country’s CPI hit 4.4 percent in May, the highest level since 2023.

Investors are also gobbling up gold in Thailand for many of the same reasons. A Thai gold dealer said he has never seen such strong demand for gold during a period of rising prices.

“At this price, people should be selling but everybody is buying. People are actually fighting to buy. The local consumers are very smart, when they hear some news, they straightaway run to the gold shops.”

For instance, long lines formed outside gold shops after Iran launched missiles into Israel in April.

Like the Vietnamese dong, the Thai baht has fallen about 10 percent compared to the dollar. The Thai stock market has also been soft in recent months, making gold a strong investment alternative. 

Singapore-based commodities and financial markets expert Michael Langford told the South China Morning Post that Vietnamese and Thai investors are trying to protect themselves against this local currency depreciation.

“If you don’t have much money in life, and all the goods that you buy and sell are ultimately priced in US dollars, and your local currency is going down, that doesn’t feel good. You have got inflation working against you, plus you’ve got currency depreciation. You are getting hit twice.”

The Post noted that this currency depreciation hit “small-time” investors the hardest, “eroding their savings and inflating costs.”

“Southeast Asians are particularly inclined to buy gold due to long-held beliefs that the metal is a reliable and tangible long-term store of value compared with other assets.”

The gold rush in Vietnam and Thailand reflects a broader trend of strong gold demand in Asia with a movement of gold from the West to the East.

For instance, we’ve also seen young Chinese investors buying gold beans and gold flying off convenience store shelves in Korea.  Gold demand in India recently surged during an important festival season. Meanwhile, the Chinese have been dumping U.S. Treasuries and buying gold.

Franco-Nevada Corp. Chairman Emeritus Pierre Lassonde recently said the world needs to wake up to this fact.

“The marginal buyer of gold is no longer the U.S. It’s no longer Europe. It’s China. … China takes up over two-thirds of all the annual production…That’s where the gold price is set.” 

Meanwhile, Western investors still haven’t hopped on the bandwagon, despite record gold prices in recent months. Fund managers Leigh Goehring and Adam Rozencwajg noted in their Q1 newsletter that Western investors have lost their influence in the gold market and continued to liquidate gold holdings in the first quarter even as prices rallied.

“Western investors continue to sell their gold while Central Banks and Chinese and Indian retail investors continue to buy aggressively. With gold making record highs, it is clear who is winning.”


Mike Maharrey is a journalist and market analyst for with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.

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