Where Dong Is Weak, Gold Rules – In Vietnam They Will Pay You To Store Your GoldBlogs, Resources — By Theodore Phalan on April 13, 2012 at 9:00 AM
Submitted by Simon Black of Sovereign Man
They Will Actually Pay You To Store Your Gold
Here’s something you don’t see every day: Banks in Vietnam will actually pay YOU to store your gold in one of their safe deposit boxes. I was pretty surprised to find this out for myself; neither Simon nor I have seen it anywhere else in the world except here.
This is actually how banking used to be. The original bankers were goldsmiths– big burly guys who worked with gold on a daily basis. They had the security systems already established, and, for a fee, they were willing to let you park your gold in their safes.
Eventually, goldsmiths got into the moneylending business; instead of charging a security fee, they would pay depositors a rate of interest for the right to loan out the gold at a higher rate of interest.
Goldsmiths’ reputations lived and died based on the quality of their loan portfolios, and their consistency of paying back depositor savings.
Today that’s all but a footnote in history. Except in Vietnam.
Vietnam’s economy enjoyed a strong boom in the mid-2000s thanks to economic liberalization and foreign capital inflows. Within a few years, the economy overheated and inflation became rampant. Then came the global financial crisis.
The Vietnamese government’s response, as it has been with governments all over the world, was to print more money. This further exacerbated the inflation problem and undermined confidence in the currency.
The unfortunately named Vietnamese dong has been devalued to the point where it now has an absurd number of zeros. Over the past 3 years it has lost some 30% of its value against the US dollar– it now takes about 21,000 dong to buy just one US dollar…