Gold loans leave debtors in dread as prices surge

The 41-year-old in Cau Giay District, Hanoi, borrowed 10 taels of gold without interest from her elder sister in 2016 to buy a house. At the time gold prices were around VND35 million per tael (of 37.5 grams), and Hanh had planned to pay off the debt within five years.

However, three years of Covid made it difficult for her to meet the payment deadline, which she eventually asked to extend.

In March 2024 Hanh’s sister asked for her money. But with only VND500 million in hand, Hanh could only pay half the debt.

She laments: "We’ve been on pins and needles for the past two months. We keep waiting for gold prices to drop, but they keep hitting new records."

Gold bullion prices topped VND90 million in May 2024, making life difficult for people who took gold loans. Illustration photo by VnExpress/Quynh Tran

At the end of 2023 Doan Son, 33, of the capital’s Hoang Mai District borrowed 10 taels from his uncle at VND5 million interest per month for buying an apartment.

But with property prices rising since the beginning of 2024, he still has not bought an apartment. He is spending sleepless nights since gold prices keep rising, not to mention the interest he still has to pay every month.

He now faces a dilemma: If he returns the borrowed gold, he loses the interest already paid and the chance to buy a property.

But if he sells the gold for cash to buy an apartment now, he might not be able to repay the debt in gold given the recent rise in its price. He constantly wonders why gold prices are surging.

Dr Ngo Tri Long, a former director of the Institute of Market and Price Search, attributes the rise to rising global gold prices and geopolitical instability.

People consider gold a safe haven during troubled times for the economy. This year gold has gained 22%, higher than all other asset classes like stocks, bonds and cash.

On May 10 SJC gold surged past VND92 million per tael, an all-time high. It downed to VND89.7 million ($3,522.76) per tael Monday morning.

Son checks gold prices every other day to determine whether to keep or return the gold to his uncle. He says his mood goes up and down like the gold price chart, and the higher it goes, the more anxious he gets.

A person looks at the gold price chart at SJC Nguyen Thi Minh Khai Street in HCMC’s District 3 on May 10, 2024. Photo by VnExpress/Thanh Tung

Mai Ly, 38, of Nam Dinh Province is having conflicts with her elder brother because of a gold loan.
In 2010 she borrowed eight taels of gold from him, a loan of VND288 million since it cost VND36 million per tael then. She has also been paying interest of VND2 million a month.

At the beginning of April this year Ly and her husband sold some land and paid her brother VND288 million. Not surprisingly, he was unhappy and said they should repay in gold. The two could not reach agreement and have been badmouthing each other since.

She says: "They never said we had to repay in gold. My brother and his wife keep saying we are ungrateful."

The topic of borrowing gold has been a hot potato on social media, with people asking for advice as conflicts arise between debtors and creditors, like in the case of Ly and her brother.

Many say debts should be returned in the same form they were taken, whether in gold or cash.

A man named Vinh Nguyen said in a post: "You only risk disappointment if you say no to a loan request. But if you say yes, you might lose both your assets and the relationship."