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Investors selling gold to purchase stocks
The gold market remains quiet with very few transactions. Analysts believe that money is flowing out of the gold market and into the real estate and stock markets.
The domestic gold market in the last few days witnessed a lot of new price records with the record set on June 1 at 21,650,000 dong per tael. However, while the gold price is scorching hot, trade is cold with very few transactions reported.
The noteworthy thing is that the gloom in the gold market takes place at a time when the stock market has become seething and the real estate market has been warming up. It has been asked if cash is flowing out of the gold market into the real estate and stock markets.
Where has all the money gone?
According to the General Statistics Office (GSO), in the first quarter of the year, Vietnam exported $2.287 billion (40,500 billion dong) worth of precious metals and stones, mainly gold.
Most of the gold exported was collected by exporters in the gold price fever attacks in February and March. At that time, the gold price skyrocketed to 19,990,000-20 million dong, which prompted investors to sell.
Since then, the gold market has been in hibernation with very few buyers and sellers. In Hanoi, transaction volumes have been just several hundred taels per day, much lower than previously.
So where has the 40,500 billion dong gone, if it has not returned to the gold market?
Analysts share the same view that the stock and real estate markets and bank deposits have attracted a good portion of the capital.
“The uncertainties and falls of the stock and real estate markets last year made the gold market the top choice of investors. However, this year, gold is not the top choice for them anymore, as the stock and real estate markets have recovered,” said Le Xuan Tung, Director of Phu Quy Gold, Silver and Gemstone Company, a big distributor of bar and jewellery gold in Hanoi.
Thien, a well-known investor in Hanoi, related that in 2008, when stock prices fell continuously, he sold stocks to mitigate his losses. With the money he withdrew from the stock market he purchased gold at 16-17 million dong per tael and dollars. In 2008, the gold price increased by 11 percent, while the VN Index slid by 66 percent.
In February and March, when the gold price surged to 20 million dong and stock prices were thought to have hit bottom, he sold gold and dollars to purchase stocks. With the investments, he plans to inject money in the real estate market as well, and is currently seeking information about the Binh Duong and Hanoi real estate markets.
Nguyen Ngoc Que Chi, General Director of Sacombank Jewellery Company, said: “The stock market proves to have gained the upper hand in attracting investment from the gold market.”
Chi added that bank deposits have also attracted money from the gold market. However, people have only made short-term deposits as they fear inflation will increase.
Waiting for opportunities to come
However, analysts don’t think that 100 percent of the money investors have got from gold sales has gone into other investment channels.
Luu Quang Dien, Deputy General Director of SJC Hanoi, affirmed that just some of the money has been used to purchase stocks and land, while investors are still waiting for opportunities to return to gold.
“I think that only 30 percent of the money has been injected in stocks, real estate or bank deposits, while the other 70 percent is being reserved for gold again,” Dien said.
Chi from Sacombank Jewellery Company also said that the capital transfer to other markets is not the main reason behind the quietness of the market. “The main reason is that the gold price has reached overly high levels at over 21 million dong per tael. At such a price, investment in gold does not bring high profit.
VietNamNet, vneconomy
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