Guest Post: Central Bank Snuffs Out Vietnam’s Thriving Gold Market

Tyler Durden's picture

Via Kel Kelly of the Ludwig von Mises Institute of Canada,

In recent years gold has become a sought-after currency in Vietnam. Why? The usual reason: its government has been printing too much money, causing prices to rise, and causing its currency, the Vietnamese dong, to plummet in value.

But by holding gold instead of the domestic currency, Vietnamese citizens know their wealth’s value will be kept constant while the local currency declines. In local currency terms, they will actually make money. The chart below shows how much gold has increased against the Vietnamese dong since 1995.

There is such a demand to hold gold in Vietnam that the public is now holding some 300 to 500 tons of gold, totaling U.S $30billion. Such large gold holdings led to gold being used as a common medium of exchange. Vietnamese citizens stored their gold holdings in banks, and opened deposit accounts denominated in gold. Banks have actually been paying customers to store their gold so that the banks can use it in loans, which have lower interest rates associated with them than do dong-based loans, presumably because of a lack of inflation risk.

Recently, however, the government-run Vietnamese central bank disallowed loans in gold. Now, it is preventing banks from paying interest to customers on their gold. Instead, it is forcing banks to charge customer to store their gold, and requiring banks to regularly report on their transactions with account holders.

What’s happening is that the government wants to prevent citizens from using alternatives to its own quickly devaluing currency. This, way, the government can continue to steal purchasing power from its citizens through inflation.

Offensive as this all is, it is not—yet—as offensive as steps the U.S. government took in 1933. The government made it outright illegal to own real money (gold) so that people would instead have to own the government’s rapidly depreciating paper currency.

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NEOSERF's picture

Forget gold...Long Dong Silver

economics9698's picture

Slowly the dam leaked at first, and then the dam broke, and so it will be with fiat currencies.  

EnslavethechildrenforBen's picture

You mean there are people stupid enough to put their Gold in a bank?

Buckaroo Banzai's picture more yanky the wanky....Donger need FOOD!

Manthong's picture

“causing its currency, the Vietnamese dong, to plummet in value.”

 “..and requiring banks to regularly report on their transactions with account holders.”

 That dong looks pretty limp.

I know what the government is trying to do with their dong, but the question is how long the people will take it.

Ying-Yang's picture

I hate when my "Dong plummets" without good reason.

ParkAveFlasher's picture

The Dong is hyperinflating, and no amount of toilet paper will clean up the coming mess.

TheCanadianAustrian's picture

Logged in specifically to +1 this.

achmachat's picture

so now they openly admit that they regard gold as a danger to them? who would have thought that tradition can be this hazardous?!

Irelevant's picture

Long „the Dong”?!

fonzannoon's picture

Gartman was ahead of his time with that trade.

Jack Sheet's picture

Wong with the long schlong was wrong to be long the dong instead of a bong.

Theosebes Goodfellow's picture

Jack Sheet?! JACK SHEET!?!?!!! Who are you? You don't know Jack Sheet!

(Sorry dude, you had that coming.) ;-)

kliguy38's picture

NO gold for the peeps.......just the "dong"

Zero Debt's picture

Printing money increases prices? Shocking.

Cognitive Dissonance's picture

Gold is the anti-fiat, the Kryptonite of the Ponzi. It diminishes the faith and belief the Ponzi priests must capture in order to legitimize their fake fiat.

Chapter Two of "Perhaps a Crumble Rather than a Collapse" was posted last night. Please stop by and take a look.

"When only a few dozen claim they understand how an economic system works we have crossed over from examining and describing a complex economic entity and into a religious cult based solely upon faith and belief."

AlaricBalth's picture

Had an opportunity to read it last night while everyone else in the house was fixated on the Stupor Bowl. I thought it was an excellent read. I plan on giving it a more thorough perusal this morning.
Thanks CD.
When is the book coming out?

Cognitive Dissonance's picture

Thank you for your kind words.

The collected writings of CD.

<"It went straight to DVD." Cosmo Kramer>  :)

I try to pack my articles with great depth, which unfortunately does not make them an easy read. I do this to try and convey nuance and subtlety. So if you were to return for a second or third read you will continue to find hidden gems.

BTW it does not look like I will be able to post Chapter Three this afternoon. I had forgoten about a prior obligation that will take me away most of the late afternoon and evening. It will probably be Tuesday after the market close before I can post. Sorry about that.

Never One Roach's picture

Vietnam black/grey market must be huge.

toady's picture

He said dong.

Never One Roach's picture

I thought we weren't allowed to say "dong" on this board ?

forwardho's picture

Let alone refer to an inflated Dong!

caimen garou's picture

gold is'nt money right, bernake? you fucking POG! I guess the world is flat and if a frog pisses on you you get warts! may 1000000000000 frogs piss on you!

Quinvarius's picture

Bullish.  The VC don't leave gold in banks unless they get paid to.  Charlie's no serf!

Pool Shark's picture



"Now, it is preventing banks from paying interest to customers on their gold. Instead, it is forcing banks to charge customer to store their gold, and requiring banks to regularly report on their transactions with account holders."

Oh, so you mean that now Vietnam bankers are treating bullion holders the same way US bankers do.


buzzsaw99's picture

they don't trust the bank system so they keep their gold at the, er, banks?

tarsubil's picture

They don't trust the currency. The lesson is to go long vault makers.

Dr. Engali's picture

On one hand they keep gold because they don't trust the fiat currency, on the other hand they will store it in the bank because they trust them. Go figure that logic.

Tod E. Tosspot's picture

I think this article is about the uber wealthy and corporate customers. Other Vietnamese no doubt are putting their money in gold jewelry. Large jewelry displays dot the landscape in places where no tourists venture (my wife is Vietnamese, and she takes me to places where I'm the only round eye in the county). Average Vietnamese tend not to trust banks with cash; I can't imagine them putting their gold there.

Sudden Debt's picture

VIETNAM... they eat dogs for breakfast...


Oldrepublic's picture

I am in Vietnam right now, did not have "dogs," for breakfast, nor did I see it on the menu!

Saw some dogs as pets

Tod E. Tosspot's picture

I've never seen it on a menu, but I'm told you can find it if you know where to go. Much less common in the south. Reminds of an English language mag I read over there announcing the opening of a pet store: featuring Saigon's largest selection of dogs and cats...for nurturing, not consumption.

Aegelis's picture

Pardon my fellow Americans who need a geography and social studies lesson.

Crime of the Century's picture

Nice try, he's Belgian. You know, the guys who invented Hutu's and Tutsi's?

darkpool2's picture

And you have a problem with that ? Just another form of protein.....what makes a dog sacred, but a chicken edible????? Get real.....westerners have lost all perspective.

hoos bin pharteen's picture

Dogs got personality. Personality goes a long way.

fonzannoon's picture

Speaking of dong can I at least get some enjoyment thinking that Tepper is taking it in the dong today with that european debt?

Inthemix96's picture

Be a fucking shame if bernank was found dead with the handle off a spade stuck up his arse.

Now I could definatley "Dig" that like.


TheFourthStooge-ing's picture

Like one of the drummers for Spinal Tap, the report would say "he died as the result of an unfortunate gardening accident".

Inthemix96's picture

Hehehe, nice one stooge.

Peronally though, I wouldnt mind seeing spade, very fucking sharp mind, stuck in cranium moment.  He could have slipped while burying his gold and accidently tarnished his head with it.

Quinvarius's picture

Dong for Gold shops leaving customers feeling confused and violated.

fonzannoon's picture

I knew there was a dong for gold joke out there but I could not put it together. Nice job.

ITrustMyGut's picture

heh.. I bought a couple "mil" vnd a few years ago.. cheap hopium of a reval.. sadly.. its only rv'd lower.. least it was a cheap bet..

Pool Shark's picture



Still holding your Iraqi dinars?



ITrustMyGut's picture

yes sadly.. lol.. its money spent.. so.. Ill hang onto them til something happens.. again.. a cheap investment ( err.. bet ) certainly not too hopeful on either of them anymore though...



tradewithdave's picture

When something is complicated.... simply "songify" it.  Futures market too complex... try swapification.  Now, everyone,... in the key of C (for Chilton)... "Row, row, row your swaps, gently up the stream..."