Central Bank Snuffs Out Vietnam's Thriving Gold Marketby Kel Kelly
Feb. 05, 2013
NSA Whistleblower Says NSA Spied On Congress, The Supreme Court And Trump
Antifa Thugs Beat Down & Arrested For Attacking Trump Supporters At Huntington Beach Rally
CNN Caught Faking Another "Live" Interview With Congressman?
France: Muslims Pray In Streets Of Paris To Protest Mosque Closure
Carlson: "U.S. Has Imported A Foreign Criminal Class That Operates A Multi-Billion Dollar Drug Trade"
In recent years gold has become a sought-after currency in Vietnam. Why? The usual reason: its government has been printing too much money, causing prices to rise, and causing its currency, the Vietnamese dong, to plummet in value.
But by holding gold instead of the domestic currency, Vietnamese citizens know their wealth's value will be kept constant while the local currency declines. In local currency terms, they will actually make money. The chart below shows how much gold has increased against the Vietnamese dong since 1995.
There is such a demand to hold gold in Vietnam that the public is now holding some 300 to 500 tons of gold, totaling U.S $30billion. Such large gold holdings led to gold being used as a common medium of exchange. Vietnamese citizens stored their gold holdings in banks, and opened deposit accounts denominated in gold. Banks have actually been paying customers to store their gold so that the banks can use it in loans, which have lower interest rates associated with them than do dong-based loans, presumably because of a lack of inflation risk.
Recently, however, the government-run Vietnamese central bank disallowed loans in gold. Now, it is preventing banks from paying interest to customers on their gold. Instead, it is forcing banks to charge customer to store their gold, and requiring banks to regularly report on their transactions with account holders.
What's happening is that the government wants to prevent citizens from using alternatives to its own quickly devaluing currency. This, way, the government can continue to steal purchasing power from its citizens through inflation.
Offensive as this all is, it is not--yet--as offensive as steps the U.S. government took in 1933. The government made it outright illegal to own real money (gold) so that people would instead have to own the government's rapidly depreciating paper currency.
Kel Kelly has spent over 13 years as a Wall Street trader, a corporate finance analyst, and a research director for a Fortune 500 management consulting firm. Results of his financial analyses have been presented on CNBC Europe and in the online editions of CNN, Forbes, BusinessWeek, and the Wall Street Journal. Kel holds a degree in economics from the University of Tennessee, an MBA from the University of Hartford, and an MS in economics from Florida State University. He lives in Atlanta.