25 April 2011

Vietnam Government resisting a move to gold as money?

Commodity Online reports that the State Bank of Vietnam is putting further restrictions on gold lending and has asked commercial banks to cease lending gold and eventually to stop accepting gold deposits.

"Vietnam has already forbidden banks from lending gold for the production and trade of gold bars since October last year. But starting May 1 banks are not allowed to offer gold loans to jewelry makers either."

"The new rule is an attempt to eliminate the role of gold as a means of payment in Vietnam, the central bank said. It noted that the government will, however, continue to recognize the right of citizens to have gold holdings."

"Gold holdings by the public were estimated to be about 400-500 tons then, said Vietnam Gold Association. Vietnam has been among a handful of countries in which banking sector takes gold deposits - bearing some interest - and lends gold as a lawful monetary means to bank borrowers. However, this practice may soon end with new regulations from the central bank."

Commodity Online has been reporting for some time about increasing restrictions on gold as its people increasing move to using gold instead of their fiat currency and with this latest move it sounds like Government sees a real threat brewing. I've had a view for some time that one will not wake up with gold suddenly banned - it will happen incrementally - and this behaviour supports that view (although this could depend on country by country factors).

Vietnam I think will be worth watching - we may well be seeing a loss of faith in fiat (hyperinflation) developing in a country where there is an existing use of and infrastructure of gold as money. How the Government responds could give some indication of how others will, but it is a unique situation as few countries have populations that familiar with gold.

Interesting to contrast Vietnam's approach with India (whose public is said to hold between 10,000 and 15,000 tonnes).

Indian bullion dealer RiddiSiddhi Bullions Limited (RSBL) has just launched a gold account with the option of allowing RSBL to lend your gold out on your behalf.

RSBL "will lend your bullion to various professional bullion market participants against adequate security ... at the sole discretion of RSBL Commodities to decide whom to lend and for what time period." As its fee, RSBL retains 10% of the income and will take liability for any defaults by borrowers.

Note that the account is not targeted at the average investor with the minimum purchase size for gold being 1 kilo.


  1. I'm not surprised. Someone showed me a Vietnamese banknote a while back, 50000 Dong it said, they've probably added an extra zero by now. Or should I say the RBA has, since Vietnamese banknotes are produced by Securrency, the RBA's graft taking banknote printer, so I've heard.

  2. Hello Bron,

    Off topic, but I just saw this comment at Along the Watch Tower blogspot.

    Just received word from a mate of mine that Australian Bullion Company (ABC) in Sydney is a mad house of people frenetically trying to order silver! There is no stock of their 100 oz, 1Kg bars nor of the Perth Mint equivalent products, and Perth Mint Coins forgeedaboudit!

    Can you confirm this behavior?

  3. Very busy in Perth as well, as it always is when prices reach new highs, seen it many times.

    Smaller dealers are likely to run out as they don't have the capital to run large inventories to deal with surges in demand.

    We are currently selling all forms of silver at http://www.perthmintbullion.com

  4. See also these articles of Vietnam's situation:



  5. See also this post


    and this comment from someone on the ground