Hedge Against Currency Risks: Why Vietnam’s Gold Market is a Safe Haven in Q2 2025

Rhys NorthwoodTuesday, May 20, 2025 10:44 pm ET
2min read
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Vietnam’s economy has emerged as a global growth hotspot, but its currency—the Vietnamese Dong (VND)—faces mounting pressures from inflation, trade imbalances, and geopolitical shifts. For investors seeking stability amid volatility, physical gold—particularly through Saigon Jewelry (SJC) bars—offers a compelling hedge. With the VND’s trading band narrowing and gold prices showing resilience, now is the time to allocate 10-15% of portfolios to this timeless asset.

The Dong’s Volatility: A Currency on the Edge

Vietnam’s GDP grew 6.4% in 2024, fueled by electronics exports and foreign direct investment. However, the VND has struggled to maintain parity with the U.S. dollar, reflecting structural risks:
- Inflation Pressures: Core inflation rose to 3.1% in April 2025, up from 2.9% in February. Food and energy costs remain sticky, driven by global supply chain disruptions.
- Trade Deficits: Electronics exports (35% of total exports) slowed to 8.9% year-on-year growth in April, while imports surged. This imbalance strains the currency.
- Policy Constraints: The State Bank of Vietnam (SBV) has kept rates low (4.5%) to support growth, limiting its ability to counter devaluation.

As of May 20, 2025, the VND/USD rate hovered around 25,950 VND/USD, with the SBV’s trading band tightening to ±5%. This narrow range masks underlying instability:
- A 10% tariff on Vietnamese textiles by the U.S. in April 2025 threatens export revenue.
- Foreign reserves, though robust at $80 billion, have dipped from 2.45 months of imports in late 2024—a critical threshold for currency stability.

Gold’s Resilience: A Hedge with Tangible Returns

Gold has long been Vietnam’s preferred inflation hedge, and recent trends underscore its value:
- SJC Gold Prices: SJC gold bars hit a record 122.5 million VND/tael (≈$3,973/tael) in April 2025, driven by global geopolitical tensions and the U.S. credit downgrade. While prices dipped to 115.5–118.5 million VND/tael by early May, they remain 16% above global spot prices, reflecting local demand and a 5% VAT premium.
- 30-Day Trend Analysis: Despite minor corrections, SJC prices have held above 115 million VND/tael since March 2025. This stability contrasts sharply with the VND’s 1.1% year-to-date depreciation.

Why Allocate 10-15% to Physical Gold?

  1. Inflation Hedge: Vietnam’s 3.2% Q1 2025 inflation and rising energy costs make gold a natural buffer.
  2. Currency Diversification: A 15% allocation to gold reduces portfolio exposure to VND volatility.
  3. Supply-Demand Dynamics: Vietnam’s gold market is fragmented, with informal trading adding premiums. SJC bars, backed by a 100-year-old brand, offer liquidity and trust.
  4. Policy Window Closing: The SBV’s narrow trading band and potential rate hikes by mid-2025 could compress gold’s premium. Act before liquidity tightens.

The Call to Action: Move Now or Miss the Boat

Investors have a 30-day window to lock in gold’s current pricing dynamics before mid-2025 policy shifts:
- SBV Interventions: The central bank may tighten liquidity to defend the VND, raising gold’s opportunity cost.
- Global Macro Risks: U.S. tariff hikes or Fed rate cuts could destabilize emerging markets.
- Technical Support: Gold’s $3,200/ounce floor (≈107 million VND/tael) is critical. A breach could trigger panic buying.

Allocate 10-15% to SJC gold today:
- Buy 1-tael bars (≈37.5 grams) for liquidity and ease of sale.
- Pair with USD-denominated ETFs (e.g., GLD) to hedge against VND depreciation.

Final Warning: The Clock is Ticking

The VND’s narrow trading band and SJC’s premium are signals—not guarantees. Delaying action risks missing the chance to:
- Lock in current price levels before policy tightening.
- Benefit from central bank buying: China’s gold reserves rose for six straight months in 2025, a trend likely to continue.
- Avoid a weaker VND: Projections suggest the dong could hit 26,200 VND/USD by year-end, exacerbating inflation.

Act now—before policy shifts and geopolitical winds turn.

The time to hedge is now. Vietnam’s gold market isn’t just a safe haven—it’s a strategic imperative for portfolios in 2025.

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