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Before Tet: selling gold to pay debts
Instead of purchasing gold and precious stones to wear for Tet, many people have been selling gold to earn money to pay off their debts. Gold shops have been facing a gloomy business season, with purchases much higher than sales.
Lan Anh, an employee of a media company, related that previously, she occasionally had to purchase gold to save as assets. However, she now has to sell the gold she previously purchased to receive money to cover expenses.
Lan Anh and her husband can earn over VND 10 million a month, which was once high enough to ensure a good life for them and their child. However, as the commodity prices have been increasing dramatically, and the quarterly and Tet bonuses are modest this year, Lan Anh has to tighten purse strings and does not dare spend much money on fashion. She has even had to sell 0.5 taels of gold to get money to pay for their basic needs, which she believes will be higher on Tet.
Thu Hong, a well-known real estate and securities investor in Hanoi, has sold her big house, two cars, one SH motorbike and a Vespa to get money to cover her losses estimated at VND 6 billion that she has incurred from real estate and securities investments.
Unlike Thu Hong, the business of Yen Van, who is now working for a state agency, and also a businesswoman on the side, has been running smoothly. However, Van has still decided to become sparing with her money as she has heard of the big difficulties of the national economy, which has pushed many workers into unemployment.
Van related that in previous years, she always spent 2/3 of her total income for the year to buy gold and gemstone jewelry, which she wore on Tet days. However, Van said that she has decided to give up this luxurious habit.
Van once was a major ‘surfing’ gold investor. With 20 taels of gold investment, she once pocketed VND 20 million within only two days. However, Van said that she does not dare venture the injection of money into gold anymore. Van has decided to deposit all the money she has in banks, something which she believes is the safest investment channel in the current circumstances.
Gold shops purchase more than they sell
The last days of December 2008 witnessed the gold price increase sharply in both the world and domestic markets. The price, which was VND 16 million/tael, climbed to VND 17 million/tael on December 22, and then has surged to the current price of VND 18 million/tael. However, unlike previously, when people rushed to buy gold upon hearing of the price increases, the new price increase wave cannot heat up the market.
“Unmarketable” was the answer that the manager of Thanh Dat gold shop, on Giang Vo street in Hanoi, gave when he was discussed the business in the days just before Tet. The gloomy market these days proves to be abnormal, as Vietnamese people tend to purchase gold at the end of the year and before Tet to wear on the holiday.
The manager said that as the gold price performance remains unpredictable, no one dares spend much money to buy gold in the context of the global economic recession and sky-high gold race.
He said that now he can only sell approximately 10 taels of bar gold everyday, while jewelry gold is selling very slowly. Customers now only purchase cheap and medium-class jewelry items.
The Hanoi branch of Phu Nhuan Jewelry Company (PNJ) has reported purchases that are three or four times higher than sales over the last few weeks. In the peak season, the branch could sell 300 taels a day, while it is currently selling only 10-20 taels a day.
According to PNJ, 50% of gold sellers these days are normal people, while the other 50% are investors. People have to sell gold now partially because they need money to cover expenses, and partially because they want to make a profit from the gold price increases.
The high gold prices and the difficulties of the national economy, which has led to the purchasing power dropping by 50% are the main factors that have made 2008 a hard year for the gold jewelry industry. And experts have warned that 2009 will also not be a year of prosperous business.
Meanwhile, prestigious journals in the world, quoting international experts, still believe that gold will remain a good investment channel in 2009, as the greenback is now under pressure of devaluation due to the US FED’s loosening monetary policies.
However, analysts have warned that the market may have more concerns about deflation than the returning of inflation in the time to come. This means that gold, the investment channel that can protect investors from inflation, will become less attractive.
Nguyen Nga
vietnamnet
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