What approach for Vietnam’s gold exchange?

More than 15 years after the closure of earlier gold trading floors, the State Bank of Vietnam’s consideration of reviving a gold exchange has drawn significant attention.

However, according to Nguyen Minh Tuan, CEO of AFA Capital, this move should be understood not as a technical policy adjustment, but as a fundamental shift in regulatory thinking toward the gold market.

The current context differs markedly from that of 2010. At that time, gold trading floors functioned largely as speculative playgrounds, operating without a clear legal framework, relying heavily on leverage, and remaining detached from the real needs of the economy. Shutting them down, Tuan argues, was a necessary decision to prevent systemic risks and curb the “goldization” of the economy.

Today, the gold market is facing structural challenges of a different nature. Most notably, a prolonged shortage of raw gold materials has forced many domestic jewelry and fabrication enterprises to scale back or suspend operations, disrupting the value chain and weakening domestic production capacity.

In this context, the objective of establishing a new gold exchange is not to encourage speculation, but to serve broader strategic goals: enhancing market transparency, managing gold flows more effectively, and directly supporting the manufacturing and fabrication sector—the segment that generates real value added for the economy.

The current orientation is to develop a physical gold trading hub, where gold is actually delivered, assayed, and stored, and where transactions are closely integrated with production and distribution chains. The focus is no longer on profiting from short-term price differentials, but on building a formal market infrastructure capable of managing raw gold imports, stabilizing supply, and improving transaction transparency. This, Tuan emphasizes, represents a foundational shift in governance philosophy rather than a mere technical refinement.

Regarding institutional design, three models are currently under discussion. The option of trading gold on a commodity exchange carries significant risks, as it could easily drift toward derivatives trading without physical delivery—an outcome Vietnam should avoid at all costs at this stage. The two remaining options—a standalone national gold exchange or a gold exchange embedded within an International Financial Center—are considered more compatible with Vietnam’s policy objectives.

Tuan personally favors either a national gold exchange or an exchange integrated into an International Financial Center under centralized state management. Such a model would allow tighter control over the entire value chain, from importation and custody to trading and distribution, ensuring that the gold exchange serves national strategic goals rather than becoming a purely financial arena.

The State Bank of Vietnam’s proposal to develop the gold exchange in three phases also reflects a necessary degree of caution. The initial phase’s focus on raw gold materials is appropriate, as this is currently the market’s most critical bottleneck. Only once supply constraints are addressed and the system operates transparently and stably should the market move to the next phase—gold bullion trading—thereby providing the public with a formal, well-regulated investment channel.

More complex instruments, such as derivatives or international linkages, should be considered only at a later stage, when regulatory capacity is sufficiently robust and the market has reached a higher level of maturity. Reversing this sequence, Tuan warns, would significantly heighten the risks of speculation and instability.

Internationally, some observers suggest that Vietnam should look to the Shanghai Gold Exchange rather than the London Bullion Market Association (LBMA) as a reference model. While LBMA is highly successful, it primarily serves wholesale institutional participants and is less suited to Vietnam’s dual objective of supporting production while offering transparent investment access to the public. By contrast, the Shanghai Gold Exchange began with physical gold trading, gradually opened access to individual investors through the banking system, and only later expanded into derivatives and international integration—a pathway that closely mirrors Vietnam’s intended approach.

Nevertheless, the greatest risk in operating a gold exchange remains the potential slide into leveraged financial speculation, which could distort the market. Governance risks are also significant if custody, assaying, and supervisory mechanisms are inadequate. As a result, non-negotiable principles must include genuine physical gold trading, strict limits on leverage in the early stages, and centralized oversight. Digitalization can enhance transparency, but only if accompanied by robust risk controls to avoid repeating the failures of previous gold trading platforms.

If implemented correctly, Tuan believes, a gold exchange would not merely serve as a regulatory tool but could become a core component of Vietnam’s national financial and commodity infrastructure. Gold would no longer remain an idle resource, but could be mobilized to support production, create employment, and generate added value—while simultaneously reducing the long-term risk of excessive goldization of the economy.