Distorted face because of gold price increase

In 2018, a 40-year-old man in Hanoi borrowed gold from his brother when he decided to buy an apartment in Ha Dong district. At that time, he thought that borrowing gold was "easier to calculate" because prices fluctuated less while bank interest rates fluctuated.

Tu's three-year debt repayment plan failed due to the pandemic. The price of gold has also increased in recent years, so he asked to postpone the repayment. At the end of this year, his brother urgently needed money, so he could not delay any longer. But the price of gold skyrocketed from 36 million VND per tael at the time of borrowing to 80 million VND, the debt grew more and more, making the man "distorted".

"From only needing to pay nearly 210 million, it has now increased to 480 million VND while bank interest rates have dropped sharply. If we pay it all, the family will not be able to afford it, and if we break the promise again, it will be difficult for us to look at each other," said Mr. Tu.

The "dancing" gold price in recent days has also become a headache for families preparing to organize weddings for relatives.

In early December, Mr. Duc Thanh, 55 years old, from Ha Tinh, received news that his 19-year-old daughter, who was working in Hanoi, had to get married because of pregnancy. Knowing that his daughter's marriage could not be postponed, he had been off work for nearly half a year due to illness, and had to rely on his wife's 7 million VND salary as a worker to cover all expenses. The family's savings were only over 100 million VND. They estimated that this amount was just enough to pay for the feast, but they did not know where to get the jewelry for their daughter's dowry.

"Giving gold to the child is a way for the family to not be inferior to the in-laws, but giving too little gold can easily be looked down upon, and the child will be at a disadvantage when becoming a daughter-in-law. But the price of gold sometimes exceeds 80 million VND per tael, so where can my family get it?" said Mr. Thanh.

Feeling similar to Mr. Thanh, for more than a month now, Hoang Anh, 30 years old, in Ho Chi Minh City, has been busy preparing 7 taels of gold to celebrate the weddings of three close friends and his sister. "On my wedding day, they gave me gold, but now giving me cash is not good. Right before the wedding day, I still haven't bought gold and I can't afford to buy it because I just started working after nearly a year of unemployment," Hoang Anh said.

The worries of Mr. Tu, Mr. Thanh and Mr. Hoang Anh are similar to many others in recent days. Statistics on domestic gold bar prices of SJC from the beginning of December to December 25 fluctuated between 73-76 million VND per tael, with December 26 alone exceeding 80 million VND. This is a record increase in gold bars since 2021. It is estimated that each tael of gold bar increased by more than 13 million VND, nearly 20% compared to the beginning of the year.

Associate Professor Dr. Ngo Tri Long, former Director of the Institute for Price Market Research (Ministry of Finance), said that according to the law, gold prices always increase in the fourth quarter of each year due to the increased demand for weddings and consumer production. At the end of this year, domestic gold prices increased abnormally due to the influence of international gold prices, the weakening of the USD, geopolitical instability and people tending to consider gold investment as a shelter in the context of unstable real estate, low bank interest rates, and unstable investment in stocks. "This makes it difficult for those who urgently need to buy gold before Tet to pay off debts and organize weddings due to the gloomy economy, unemployment and prolonged layoffs," said Mr. Long.

As for Mr. Tuan Tu, the debt payment deadline has come but he was subjective, "it will probably only increase by a few million dong" so he did not save, causing him to lose the ability to pay. The 40-year-old man plans to pay half in advance, and will find a way to send the rest back as soon as possible. "If you do not agree, I will mortgage the house I am living in because there is still hope for bank interest rates to decrease, but the price of gold will only increase," he said.

Not wanting to borrow gold to pay back due to financial difficulties, Duc Thanh and his wife discussed renting it to save face for their family on their daughter's wedding day. The man revealed that the cost of renting a set of jewelry including two necklaces and a bracelet of about one tael of gold at a gold shop more than 20 km from their home was about 300,000 VND per day. After the wedding, they told their daughter to tell her husband in advance that "whoever gave them the gold, they keep it" so they would have an excuse to return it.

"My family is poor but I still want my daughter to be proud of her husband's family and friends," Thanh confided.

Recently, the wedding gold rental service has recorded an increase in the number of customers. Ms. Nguyen Thi Loan, 55 years old, owner of a wedding jewelry rental shop in Hoang Mai district (Hanoi), said that the number of customers remained stable when the service started in 2015. But after two years of the pandemic combined with the time when gold prices were soaring, the demand for rentals this year increased by more than 30%. "Especially during the wedding season at the end of the year, there are many times when supply cannot meet demand," Ms. Loan said.

Customers who come to Ms. Loan's shop are mostly poor workers or recent graduates with poor economic conditions. Not only Hanoians, but also people from neighboring provinces come here, the rental price ranges from 200,000-300,000 VND per day. Customer information is kept confidential because this is a sensitive matter.

Some jewelry store owners in Ho Chi Minh City also noted that during the wedding season, rentals increased dramatically. "Depending on the jewelry set, the rental price ranges from a few hundred thousand dong to a few million dong," said the owner of a gold shop (who requested anonymity).

According to Associate Professor Dr. Le Quy Duc, former Deputy Director of the Institute of Culture and Development, Ho Chi Minh National Academy of Politics, it is natural to be forced to buy gold to pay off debt even though the price is high, but having gold by all means just to look beautiful on the wedding day is not a good thing.

"Nowadays, people compete to show off their houses, cars, and show off their status with luxurious gifts at weddings. That is also the result that makes many people have to rent gold to satisfy doctors, using the excuse of fear of outsiders judging them and criticizing them for being poor," said Mr. Duc.

Experts also affirm that renting gold for weddings is not bad but it is unnecessary, inauthentic and can easily become arrogant, especially in a period when gold prices are inversely proportional to income.

"Instead of living a lie to satisfy our ego, we should promote sincerity and give our blessings to the young couple on their big day," the expert said.

In addition to people buying for personal use, the demand for gold storage tends to increase. Some gold shops in Hanoi said that from December 26 until now, gold bars have been "out of stock" at many times, with purchasing power increasing by 30% compared to previous years.

Associate Professor Dr. Ngo Tri Long warned that hoarding and buying to wait for price increases to profit from the difference is not sustainable because in the long run, domestic gold prices will fluctuate up and down following the world prices. In addition, speculation also has many potential risks because at times the gold price fluctuates up to 15 times in the same day, at times it drops by 3 million VND per tael, causing heavy losses for buyers.

"Instead of hoarding gold with the expectation that the price will continue to rise, people should calculate investments that are suitable to their financial capacity and carefully research the market. In addition, the government also needs to control the difference between domestic and world gold prices to avoid disrupting people's lives," the expert said.