Vietnam’ gold reserve equals 20-45% GDP

Vietnam’s gold reserve is estimated to range between 460 tons (Gold Fields Mineral Services) and 1,000 tons (World Gold Council), equivalent to $21-45billion or 20-45% of Vietnam’s GDP in 2010, the local media Vnexpress reported

Vietnam’s gold reserve is estimated to range between 460 tons (Gold Fields Mineral Services) and 1,000 tons (World Gold Council), equivalent to $21-45billion or 20-45% of Vietnam’s GDP in 2010, the local media Vnexpress reported the information from the seminar “Effects of gold market on Vietnam’s financial market” held by National Financial Supervisory Committee (NFSC) on June 9.

The ratio of Vietnam’s gold reserves to GDP is “too big” compared to the countries with biggest gold reserves whose gold holdings make up only 3% of GDP, said Le Xuan Nghia, Vice Chairman of the NFSC, adding that even food and food services only contribute nearly 40% to Vietnam’s GDP.

However, the specific figures hasn’t been officially confirmed by any Vietnam’s functional bodies, the Vnexpress cited, adding that even the State Bank of Vietnam (SBV) has no idea about exact gold holdings by the public.

The central bank said most of local public have low demand for gold, except for people in big cities. However, Nghia believed that the public’s demand for gold hoarding, investment is “true” and “very high”.

He cited the NFSC’s recent survey results that one third of households in Hanoi store gold, in which 92% of them keep gold as part of their habit, and to protect themselves from inflation.

The survey statistics also showed that gold and forex make up about 17% of Hanoi people’s investment structure.

“Indeed, a huge financial source didn’t flow to where could directly create goods, enhance productivity and the country’s competitiveness but instead go around financial channels including gold and dollars, which might have put pressures on forex market, balance of payment, monetary policies and economic growth”, Nghia pointed out.

Also in the seminar, experts didn’t agree with the idea of “one-way gold trading” and stop bullion tradding.

The public’s demand for keeping gold as store of value will likely remain once economy is not yet stable and inflation is still accelerating, Le Duc Thuy, Former Chairman of the NFSC, adding that it’s necessary to creat favorable conditions for gold buying and selling.

“There should be a legal framework to attract the public’s stored assets to the ecnomy”, he noted.
Truong Dinh Tuan, Ministry of Industry and Trade’s Former Minister also said the demand for gold investment is true, therefore it’s impossible to stop gold bar trading.

“Once this demand remains, people will seek ways to trade. It’s the rule.”, Tuyen warned, adding that if the SBV targets to stop gold tradin in the free market without studying thoroughly a market regulation regime, it will create a negative sentiment for the public”. – Stoxplus.com

Tags: vietnam gold, Vietnam gold market, Vietnam gold reserve