A country that trusts gold

Every year on the tenth day of the first lunar month, queues form outside gold shops across Vietnam long before the doors open. It is the Day of the God of Wealth, and buying even a single chỉ of gold, a little under four grams, is said to bring luck for the year ahead. Economists tend to treat the ritual as a charming curiosity. They would do better to treat it as data. A country's relationship with gold tells you a good deal about how far its people trust everything else: the banks, the currency and the promises of the state.

By most estimates, Vietnamese households hold hundreds of tonnes of gold, much of it in rings, bars and jewellery kept at home rather than in any vault. To an outsider, this looks like money left to gather dust. Gold pays no interest, costs something to store and can be stolen. For families whose parents lived through the hyperinflation of the 1980s, however, when prices at times rose by several hundred per cent a year, the habit is perfectly logical. A savings account that pays six per cent is of little comfort if the currency it is held in can lose half its value in a matter of months. Gold, by contrast, has held its worth across wars, reforms and changes of government.

There is, in addition, a social dimension that spreadsheets tend to miss. Gold is how families save for a rainy day, and how wealth moves between generations and between households. It is given at weddings, worn by the bride, sold in hard times and pawned when a relative needs money for a hospital bill. In that sense it functions less as an investment than as a kind of insurance policy that the whole neighbourhood can see. Its very visibility is part of the point: a bracelet on a daughter's wrist says something about a family's standing that a bank statement never could.

Governments, understandably, see things differently. Every tael sitting in a wardrobe is capital that is not being lent to businesses or used to build roads. Over the past decade, the authorities have tried to coax that gold out into the open, tightening control over the production of bars and nudging savers toward the banking system. The results have been mixed at best. When the gap between domestic and world gold prices widened sharply in recent years, it served as a reminder that heavy-handed regulation can create the very speculation it sets out to prevent, as traders rushed to profit from the difference.

It would be a mistake, however, to read the attachment to gold as mere conservatism. Younger Vietnamese increasingly put their savings into shares, property and even cryptocurrencies, often with an appetite for risk that alarms their parents. What they share with the older generation is a lingering suspicion that those in charge might move the goalposts without warning. Seen in that light, a stock portfolio and a drawer full of gold rings are not opposites but two answers to the same question: how do you protect yourself when you are not sure whom to trust?

The lesson extends well beyond Vietnam. Trust in institutions is not a natural resource; it has to be earned slowly and can be lost overnight. Until savers believe that their deposits are safe and their currency stable, regulation alone will not persuade them to give up the comfort of something they can hold in their hands. The queues on the God of Wealth's day, in short, are not a sign of superstition so much as a verdict, delivered politely and paid for in cash.