A New Perspective on Gold

Vietnam is now facing an opportunity to comprehensively reshape its gold market, which has long been sensitive and carried wide-ranging implications for monetary policy and social psychology.

Gold should be repositioned as a strategic commodity—similar to oil or other precious metals—that can be traded, stored, and regulated like any other commodity. Recently, the Prime Minister tasked the State Bank, Ministry of Finance, and other relevant agencies with studying the formation of a gold exchange that would allow citizens to freely trade and transact gold. The aim is to clearly separate state management from gold production and business operations; to promote gold jewelry manufacturing for job creation; and to enhance communication to ease public anxiety over hoarding gold. It also includes exploring electronic invoicing systems integrated with cash registers in gold transactions.

However, to effectively implement this vision, a new mindset is required regarding gold as a special commodity with significant influence on the economy. According to Nguyen Minh Tuan, CEO of AFA Capital, gold has long been viewed as a medium of exchange and store of value. Since Decree 24/2012/ND-CP, however, Vietnam has gradually phased out gold’s monetary role, removing gold deposit and lending activities from the banking system.

Instead, gold should be treated as a strategic good—a tangible asset like oil or metals—that is tradable, storable, and subject to standard market oversight. This reclassification will improve transparency in the domestic gold market and support macroeconomic control over interest and exchange rates.

Looking back at Vietnam's pre-2010 gold market, when online or CFD-based gold trading platforms proliferated, it is clear that failing to distinguish between types of gold—physical gold, account-based gold, and CFDs—led to negative consequences.

Physical gold is tangible and commonly bought as SJC bars, rings, or jewelry. In contrast, account-based gold and CFDs are financial derivatives involving no physical ownership, only speculation on price movements. When investors expected to withdraw physical gold from derivative platforms, the exchanges were forced to hold positions, incurring losses when markets reversed—as seen during the 2008 crisis.

Experts now emphasize that any new gold exchange should start with physical gold trading only. Account-based and CFD models previously caused systemic risks and should be avoided initially.

A recent survey among Vietnamese financial advisors shows that 96% support the creation of a physical gold exchange—a transparent, secure, and value-driven option aligned with global practices.

Globally, physical gold exchanges are effectively operating in London (LBMA), India (IIBX), and China (Shanghai Gold Exchange). Each has its strengths, but all focus exclusively on physical gold, avoid leverage, and operate under strict regulatory oversight.

For example, LBMA in London—the world's largest gold trading hub—uses the "good delivery" standard, requiring gold to meet purity and weight benchmarks, with robust custody and settlement systems. India's IIBX, launched in July 2022, has traded 60 tons of gold and is now the country's only official import channel, improving transparency and reducing smuggling.

China's model goes further: its gold exchange only handles physical gold, excludes CFDs, and is directly supervised by the central bank—a structure experts say fits Vietnam's needs.

Recommendations for Vietnam

Drawing from global models, AFA Capital’s CEO recommends Vietnam build a physical gold exchange with clear rules for trading, custody, and state oversight. There must be a strict separation between government regulation and commercial gold activity, with the State Bank playing a supervisory role, similar to China's approach.

Trading should be limited to physical gold in the initial phase, avoiding account-based or CFD products. Gold certificates could be considered later, but transactions must involve real delivery and settlement.

Allowing official gold imports, implementing e-invoicing, and integrating point-of-sale systems are essential steps to create a transparent and manageable market. If done right, the current price gap of 10–15 million VND per tael between domestic and international gold could significantly narrow.

Another goal is to reduce the public's tendency to hoard gold, which locks away tens or even hundreds of tons in private safes. A trusted and transparent gold exchange could channel this idle gold into the economy, similar to India’s gold mobilization programs.

"In India, the government successfully mobilized idle gold through a transparent and efficient exchange system. This is a promising way to stimulate economic growth without resorting to expansionary monetary policy," Tuan noted.

Tuan also outlined five major benefits of launching a physical gold exchange:

- Reduces goldization of the economy, avoiding past habits like pricing property in gold or gold-based banking.

- Increases market transparency, breaking up monopolies and reducing price manipulation.

- Aligns domestic gold prices with global levels, reducing speculative and emotional investing.

- Converts private gold reserves into capital for economic development.

- Enhances monetary policy control by isolating gold from interest and exchange rate impacts.

Vietnam now has a significant opportunity to establish a professional, transparent, and efficient gold market. Amid global uncertainties, gold remains a safe haven asset—but only if traded under clear, well-regulated frameworks that distinguish real investment from speculation.

As the global gold trade moves toward greater transparency and standardization, Vietnam must not be left behind. A well-executed gold exchange will not only be a financial tool but a symbol of Vietnam’s shift toward a modern, sustainable, and globally integrated economy.