Recently, following directives from authorities, the State Bank of Vietnam (SBV) has coordinated with ministries and sectors to research the gold exchange project. In a document sent to a seminar on November 18, the Foreign Exchange Management Department stated that SBV will submit a report to the Government on this matter, along with a proposal to assign tasks to related ministries and sectors.

However, this agency warned that establishing a gold exchange will pose many challenges.

Firstly, gold trading is a conditional business under the Investment Law. Therefore, the operations of the gold exchange must be carried out on the principle of prudence, with a roadmap suitable to reality, ensuring safety, transparency, and protecting the legitimate rights and interests of participating members.

Furthermore, Vietnam is not a gold mining country. From 2014 until before 2024, to serve the goals of managing exchange rates and accumulating state foreign exchange reserves, SBV did not import gold and did not license gold imports to businesses. 

Domestic gold supply was only supplemented in 2014 and 2024 through infrequent, small-volume interventions in the gold bar market by the central bank. Not to mention the lessons from the past: during the 2006–2010 period, the spontaneous gold trading floors in the domestic market used financial leverage, creating significant risks and dangers for the gold market in particular and the financial market in general, especially when gold prices fluctuated sharply.

"Gold is a high-value commodity, requiring a physical gold storage warehouse system that ensures security and safety of assets. The requirements are even higher compared to holding cash or valuable papers; it also demands responsibility and honesty in storing and reporting gold transactions. Meanwhile, Vietnam does not yet have a centralized gold storage warehouse system or a specialized gold testing center.”

Given the advantages and challenges, for now, trading on the domestic gold exchange should be limited to physical gold, according to the Foreign Exchange Management Department.

Roadmap for gold exchange

Nguyen Minh Tuan, CEO of AFA Capital, noted that the term “gold exchange” can evoke memories of the CFD model that caused losses for investors a decade ago, when transactions were based solely on price differences without physical gold.

Therefore, Vietnam should aim for a physical gold exchange operating under national standards with transparent delivery-and-receipt mechanisms.

“The core of the new model is the answer to the question “Who are the buyers and sellers? Is payment real? Can buyers receive physical gold or must they place it in custody? When reselling, must they deliver physical gold? These requirements are meant to separate the new model from earlier CFD platforms,” Tuan said.

According to economist Can Van Luc, Vietnam needs to choose an appropriate model  such as an independent gold exchange, trading via a commodity exchange, or locating it in an international financial center in HCMC. Also needed are mechanisms for price listing, taxes and fees, import-export procedures, and inter-agency coordination.

Regarding the gold exchange building, experts proposed the rollout in three phases: the first stage trades only imported raw gold; the second stage expands the distribution system to businesses; and the third stage considers derivative products once the legal framework and data are completed.

However, Vu Hung Son, Chair of the Board at Bao Tin Manh Hai, said businesses are concerned that import quotas allocated to banks and major enterprises will mainly serve their internal needs.

"If other jewelry manufacturers do not have the opportunity to access this gold source, the exchange will be difficult to create vibrancy and difficult to promote its role in regulating the market," Son said.

Economist Ngo Tri Long emphasized that the problem is not just "to have or not to have a gold exchange," but how to design and operate the exchange so that the State can control and supervise effectively.

A standard gold exchange will help regulatory agencies monitor transactions in real-time, grasp buying and selling flows, market volatility, market risks, and identify groups that impact the price. When centralized data is available, regulatory agencies can intervene with market tools when necessary, such as applying position caps and transaction limits, or implementing risk prevention measures.

The biggest benefit of a gold exchange is that every transaction is continuously recorded and reported, allowing managers to operate the market based on real data, instead of speculation. 

Duy Anh