The gold under the floorboards: inside Vietnam's $80bn shadow savings

HANOI — On a narrow lane off Hang Bac, the old silver street in the capital's ancient quarter, a 58-year-old shop owner named Bui Thi Hoa keeps her family's savings the way her mother did: in gold, locked in a safe behind a false panel in the back room. She does not trust the banks, she says, and she does not entirely trust the currency. When she sells a slab of jewellery, she prices it in taels of gold and converts to dong only at the last moment.

Hoa is not an outlier. She is a data point in one of the largest and least understood pools of private wealth in Southeast Asia — the gold that Vietnamese households hoard outside the formal financial system. Estimates vary wildly because, by definition, no one can count it. But interviews with bullion traders, economists and two former central-bank officials over six weeks point to a stock worth somewhere between $60bn and $80bn, equivalent to a meaningful slice of the country's annual output.

That hoard is not idle. It anchors an informal credit system, distorts monetary policy, and quietly drains savings that the State Bank of Vietnam would dearly like to channel into the banking sector. This is the story of why Vietnamese keep their wealth under the floorboards — and why the state's long campaign to coax it out has, so far, failed.

A century of distrust

To understand the gold, you have to understand the memory. Older Vietnamese lived through hyperinflation in the late 1980s, when the dong lost value by the week and savings evaporated. They lived through currency reforms that wiped out cash holdings overnight. Gold, by contrast, held its worth through war, revaluation and reform. The lesson was absorbed across generations: paper is the state's; gold is yours.

That distrust calcified into habit. Weddings are settled in gold. Property deals in the secondary market are still frequently quoted, and sometimes paid, in taels — the local unit equal to roughly 37.5 grams. When a family wants to store value across a decade, it does not open a fixed deposit. It buys a bar.

My grandmother told me the bank can change the rules overnight, but a gold ring is a gold ring in any government. I believed her then and I believe her now, said a 34-year-old software engineer in Hanoi who keeps roughly a third of his savings in bullion.

The persistence of this behaviour among the young is what unsettles policymakers most. It was meant to fade with prosperity and financial sophistication. Instead, a generation that banks on its phones, invests in stocks and trades crypto still parks a slab of its net worth in metal it can hold.

The frozen market

For more than a decade, the government tried to tame the gold habit through control. A 2012 decree handed the State Bank a monopoly on producing gold bars under a single national brand and barred most private firms from importing bullion. The intent was to break the link between domestic gold and the dollar, and to stop gold from functioning as a parallel currency.

The policy half-worked and half-backfired. It did reduce official gold-for-goods transactions. But by choking supply, it drove a persistent and sometimes enormous premium between the local price of a government bar and the world price — at moments exceeding 20 per cent. That gap became its own market signal, a barometer of how much Vietnamese would pay to hold gold they could not easily get.

The premium spawned an entire grey economy. Smuggled gold flows across the Cambodian and Laotian borders to feed demand the official channel cannot meet. Jewellery shops act as informal exchanges, swapping bars for cash with margins that fatten when supply tightens. Customs seizures of bullion mules — couriers carrying kilos taped to their bodies — have become a recurring news item.

In 2025 the State Bank began loosening the screws, allowing a handful of licensed banks and firms to import gold and signalling that the single-brand monopoly might end. The premium narrowed. But the underlying behaviour did not change. Vietnamese did not stop buying gold; they simply found it easier to buy.

How the shadow lends

The hoard does more than sit. In the lanes of Hanoi and the markets of Ho Chi Minh City, gold underpins an informal lending system that operates entirely outside the regulated banking sector. A small-business owner short on working capital can pawn a gold chain at a shop for cash, repay with interest in weeks, and reclaim the metal. The rates are punishing — often equivalent to 3 to 5 per cent a month — but the access is instant and the paperwork nonexistent.

At a larger scale, gold serves as collateral in private credit circles known as hui or ho — rotating savings-and-credit associations in which members pool contributions and take turns drawing the pot. These chains have funded everything from market-stall expansions to property speculation, and when they collapse, they take real money with them. Several high-profile hui failures in recent years have left hundreds of savers out of pocket, with no deposit insurance and little legal recourse.

Economists who study the system describe it as a second banking sector hiding in plain sight — one that intermediates savings into loans without any of the prudential machinery that governs the formal one. No capital ratios, no reserve requirements, no lender of last resort. When it works, it lubricates an economy the banks underserve. When it breaks, the losses are invisible until they surface as ruined families.

We have two financial systems in this country, one we measure and one we do not, said a former monetary-policy official who spent two decades at the central bank. Policy is set for the first. People live in the second.

What it does to policy

The macroeconomic cost is the part that keeps central bankers awake. Every dong converted to gold is a dong that leaves the banking system, where it could fund credit, and enters a dead-weight store of value. The State Bank estimates — conservatively — that mobilising even a fraction of the gold hoard into deposits or government bonds could materially lower the cost of capital for Vietnamese firms.

Gold demand also complicates the management of the dong. When confidence wobbles, households rush into gold and, indirectly, dollars, putting pressure on the currency precisely when the central bank can least afford it. The gold market thus becomes a transmission belt for anxiety, amplifying the very instability the authorities are trying to contain.

And the metal undercuts monetary policy directly. When the State Bank cuts interest rates to stimulate growth, lower deposit returns make gold relatively more attractive, accelerating the leakage. The tool meant to pump money through the economy can instead push savings out of it. It is a bind with no clean exit.

The schemes to draw it out

Over the years the state has floated idea after idea to mobilise the gold. The most ambitious is a gold-deposit or gold-bond scheme, modelled loosely on India's, in which citizens would lend their bullion to the state in exchange for interest paid in gold or dong, with the metal then put to productive use. Versions of the proposal have circulated for years without launching.

The obstacles are practical and psychological. Practically, a credible scheme requires the state to guarantee return of the gold, which means holding reserves and bearing price risk it would rather avoid. Psychologically, it asks citizens to hand their most trusted asset to the very institution they hoard gold to avoid depending on. Trust, once lost across generations, is not rebuilt by a competitive coupon.

A newer line of thinking, championed by reform-minded economists, argues the answer is not to capture the gold but to make the dong worth holding. Stable inflation, a predictable currency, deep and trustworthy capital markets, and deposit insurance that people actually believe in — these, the argument goes, would do more to draw out savings than any clever bond. The gold habit is a symptom; the disease is distrust.

The young and the metal

There are signs the calculus is shifting at the margins. A new generation of Vietnamese investors has more options than its parents: a maturing stock market, government bonds accessible by app, fractional gold products that let buyers hold metal digitally without storing a physical bar. Some of the hoarding instinct is being rechannelled rather than abandoned.

Fintech firms have spotted the opening. Several apps now offer digital gold savings, allowing users to buy fractions of a gram and accumulate over time, with the physical metal held in a vault. Adoption has been brisk among urban professionals who want gold's psychological comfort without the safe in the back room. Whether this formalises the hoard or merely digitises the same avoidance is a question the data cannot yet answer.

The shop owner Hoa is unmoved by all of it. She has heard of the apps. She does not see the point. The gold in her safe survived her grandmother, her mother and a half-dozen governments, and she intends for it to survive her too. Until the state gives Vietnamese a reason to believe the dong is as durable as a tael, the floorboards will keep their secret.

That is the uncomfortable conclusion of six weeks of reporting. Vietnam's shadow savings are not a relic to be modernised away but a rational response to a century of broken promises. The $80bn under the floorboards is, in the end, a vote — a verdict on the currency, the banks and the state, rendered one gold bar at a time. Reading it correctly may matter more to Vietnam's financial future than any single interest-rate decision.