Vietnam Banks Pay Gold Owners for Storage

Here is an enlightening piece from Tim Staermose of the Sovereign Man.

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.

Read the rest here.

Interesting to note that despite technical political restrictions to do so by Vietnam’s authorities, whom sees gold as a constriction to their activities, paying fees to gold depositors seem to have become an ingrained practice by Vietnamese bankers. The simple reason for this is that gold ownership has been the main preference of the average Vietnamese over fiat money or the dong.

Yet perhaps, today’s exception will become the tomorrow’s norm. Stated differently, perhaps Vietnam’s banking ‘archaic’ banking system could become the banking system's paradigm of the future.

Add to this Malaysia’s desire for a gold standard, India’s cultural attachment to gold and the growing appetite for gold by the Chinese as evidenced by surging imports (see chart above from US Global Funds), I’d say that these evolving trends in Asia could serve as clues to the direction of the prospective reforms of the global monetary system.