(PLO)- Gold is still worthy of being an asset portfolio worth investing in because of its good liquidity and low risk under the impacts of policies.
Newspaper Ho Chi Minh City Law just had a discussion with gold expert Tran Thanh Hai, Chairman of the Board of Directors of Vietnam Gold Trading and Investment Joint Stock Company – VGB cum Rector of Vien Dong College, about precious metal investment channel.
Mr. Hai said that by the end of 2022, the domestic gold price will hardly have a similar shock reduction on July 18, when gold lost up to 5 million dong/tael in a few hours.
Gold price does not increase despite global inflation
. Reporter:What do you think about overview of the world gold price in the first half of 2022, especially when the gold price reached an all-time high at the end of February but still slipped?
+ Mr Tran Thanh Hai: At the end of February 2022, the world gold price had the highest increase in history when approaching USD 2,068/ounce. However, that level only held for a day, after which there was no further breakout. In March and April, there were two waves of gold rising above 1,900 USD/ounce, then fluctuating at 1,700-1,800 USD/ounce.
There have been two extremely important events that primed gold to rise in price. The first is global inflation, with the US, UK and Europe facing the highest inflation rate in the past 40 years; the second is geopolitical tension but not enough lift for gold prices.
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SJC gold bar is a form of accumulated assets chosen by many people. Photo: THUY LINH |
Meanwhile, in August 2020, the gold price also increased to a record at $2,063 per ounce and remained unchanged for three days. This shows that the gold price is closely tied to the USD index. August 2020 is the time of the US presidential election race. At that time, incumbent President Trump and candidate Biden offered two almost opposite fiscal and monetary policies. The entire US political scene rushed into the presidential race, making the USD uncertain about the policy that pushed gold prices up sharply.
On the contrary, in fluctuations in inflation and geopolitical events, the US is only partially involved, so the influence of the USD on gold is also softer.
. DRAWWhy is global inflation skyrocketing, but gold prices don’t? teh?Floating?
+ Inflation is the cause of the increase in the price of gold because inflation causes the currency to depreciate, people look to a safe asset, gold. At first, people still thought that inflation was temporary, so fiscal policy should be used to create jobs and restore the economy. However, due to the break in the supply chain, too high energy prices have caused prolonged and severe inflation. As a result, the US and Europe sharply raised interest rates. When interest rates increase, the domestic currency, especially the USD, will increase in value, causing the gold price to go down.
KYinvestment channelsafe end of the year
. How do you evaluate it about the domestic gold market with fluctuations both according to the world’s gold and its own?
+ Looking at the price of gold in Vietnam must separate two directions. Only ring gold follows world price fluctuations, while SJC gold bars are currently very difficult to analyze.
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In addition to gold bars, customers can invest in 9999 gold rings. Photo: M.PHUONG |
We see that after 2012, when the Government issued Decree 24, the SJC gold price almost escaped from the world gold price. Especially, in the last three years, if calculated from 2019, the price of SJC gold has become too different from the world gold price. In the last session of the National Assembly, many delegates questioned the Governor of the State Bank (SBV) about the price difference between SJC and the world gold bar.
The SBV has also consulted a number of organizations on this issue in order to amend Decree 24. Recently, on July 28, the Prime Minister, when working with ministries and central agencies, said to curb inflation and stabilize the macro-economy, especially giving a message of anti-dollarization and anti-goldenisation.
Thus, it can be seen that the State will still keep the view that SJC gold bars are national brand gold bars, as well as the ability to grant quotas for commercial banks to bring foreign currencies to import gold bars. SJC gold bar continues to be at a high level compared to the world gold price.
I can hardly say which direction the SJC gold price will go, unless there is an extremely volatile day like July 18. At that time, I explained that there was a strong selling force from joint-stock commercial banks or investment funds, when seeing the USD about to increase dramatically, I restructured the portfolio from holding gold to holding USD.
This phenomenon does not come from large gold units because before they still bought at 68 million dong/tael, there was no reason only 24 hours later they reduced the price.
. Currently, the price of SJC gold is very high, the amount of gold in the population is still high, why don’t they sell it to take profit, making the gold supply so short that the price difference is as high as it is today?
+ SJC was established in 1988 and produced over 25 million volumes.
However, the amount of gold in the population is not small. SJC gold bar is still an effective storage asset for both organizations and individuals. It is possible to explain the action of storing gold of each individual or organization to allocate a reasonable investment portfolio, similar to the action of a central bank. That means they don’t use up all their money to save or buy stocks and land, but allocate cash flow to gold.
. So, is it possible to invest in SJC gold now, sir?
+ With the brand name of state-owned enterprises plus dominating the market for more than 30 years, SJC gold has become popular. Because of this, coupled with the almost broken supply-demand relationship, SJC gold is too disparate from world gold.
If assumed as a means of storage, holding SJC gold is too wasteful. We can still buy gold equivalent to the proportion of four 9s. People with moderate income instead of buying nearly 70 million dong of gold can buy gold rings at prices that are close to the world today, still useful and beneficial.
Gold rings are also easily changed into jewelry to serve for weddings or property to keep for children and grandchildren. It’s just a little inconvenient that the types of gold rings are a bit complicated to store (now many gold houses have made gold rings into a quantity) and buy from any shop to sell that store to get the best price.
. How do you evaluate it about investing in gold versus real estate and stocks?
+ In 2021, gold is overwhelmed by stocks when the stock index increases by 36%, while gold only increases by 7%-8%. The profit of gold is too small compared to real estate when the profit is calculated at 100%.
Although stocks and real estate have high rates of return, it must be seen that the volatility of these two investments is also very terrible, plus the disadvantageous factor depends heavily on macroeconomic policy.
Meanwhile, gold is also affected by monetary policy, but not as much and directly as stocks or real estate. From now until the end of the year, gold is still a safe investment channel.
. Thank you sir.
What is the future price of gold?
According to Mr. Tran Thanh Hai, the US midterm elections will take place in early November 2022, which is also a variable that will have a certain influence on the gold price.
And looking at the US Federal Reserve (Fed) raising interest rates in September, it is likely that gold prices will fluctuate but not strongly. In my opinion and experience looking at the market, the price of gold is often influenced by uncertainty rather than clarity.
Uncertainties like the Fed raising interest rates are no longer a secret. Therefore, even though interest rates increased, the factor that adjusted gold prices decreased further because investors knew that if September did not raise 0.75%, it would also increase 0.5% and they had a scenario to restructure their portfolio.
Phuong Minh – Quang Huy