Introduction
Background
1.1.1 Gold as a global feature asset
Gold has been utilized for decoration and as a reserve asset for thousands of years due to its unique properties This noble metal maintains its eternal shine, as it does not oxidize, making it highly desirable Additionally, gold is the most malleable and ductile of all metals, adding to its value With an estimated 170,000 tons of gold in the earth, its scarcity further enhances its appeal.
Gold has a rich history, first utilized as jewelry in the Middle East around 3000 B.C By 1500 years later, it evolved into the Shekel, the first gold coin that became a standard for trade and exchange of goods in the region.
In 1091 B.C., gold was established as a form of currency in ancient China, marking its significance in trade From the early 18th century until the end of the Bretton Woods system in the 1970s, gold served as the global standard for international transactions and currency exchange.
In the global economy, gold is regarded as "real money," as its value is not tied to the political and economic stability of any issuing country, unlike traditional currencies This inherent stability is why central banks around the world maintain a portion of gold in their foreign reserves The United States, recognized as the strongest economy, also possesses the largest gold reserves in its treasury.
Figure 1: Top 30 countries/organization holding gold as reserve assets (tones)
Gold serves multiple purposes, including industrial applications, religious practices, and symbolizing wealth and power globally Its intrinsic value remains high and irreplaceable, leading to a rising demand in the global market, particularly amid recent international financial turmoil and geopolitical tensions Since the dot-com collapse in 2000, gold prices have consistently increased, bolstered by various economic crises, such as the 2008 global financial crisis and the 2010 Greek debt crisis The price of gold peaked at over $1,650 per ounce in 2012 before declining with the recovery of the U.S economy.
Figure 2: World gold demand in period 2000-2015
Figure 3: World gold price period 1970-2015
Gold is recognized as a popular investment instrument, often referred to as a "safe haven." According to the World Gold Council (2015), investments in gold account for over one-third of global demand, highlighting its appeal among international investors seeking to diversify their portfolios amid economic uncertainties Investors can engage in gold investment through various methods, including purchasing physical gold bars from jewelry stores, banks, or financial service companies Alternatively, they can invest in gold exchange-traded funds (ETFs), which are publicly listed investment vehicles whose value is linked to gold prices in the market.
Figure 4: Gold ETF holding in global market
1.1.2 Demand for gold in Vietnam
In Vietnam, gold has long been a traditional asset for wealth accumulation The World Gold Council (2015) reports that Vietnam ranks among the largest consumers of gold, exhibiting a significant growth rate in demand for this precious metal.
Figure 5: Gold demand in selected countries
Vietnamese culture, similar to other Asian societies, places a high value on gold consumption, which is deeply rooted in its traditions Gold holds significant cultural importance, especially among ancient communities, where it symbolizes power and wealth Individuals in higher income brackets often showcase their status through the use of gold and golden hues During key life events, such as weddings and business ventures, gold jewelry remains an essential element, reflecting its enduring significance in contemporary Vietnamese society.
Figure 6: Vietnam gold demand period 2000-2015
In Vietnam, the high demand for gold positions it as a preferred choice for long-term wealth preservation Gold is widely recognized and accessible, with at least one jewelry store in every market across the country The trading of gold and foreign currencies is closely regulated, reflecting their significant role in maintaining economic stability Consequently, citizens are required to purchase gold bars through legal channels.
Vietnam faces a significant need for capital to drive its economic development, yet a substantial amount of wealth—estimated between 400 to 1,000 tons of gold—is stored in households across the country (Thuy, 2013) Many Vietnamese families utilize gold as a hedge against inflation, which poses a risk to their financial stability This high demand for gold has created challenges for the economy, as gold imports have contributed to a persistent trade deficit in recent years.
Problem statement
The gold market significantly influences Vietnam's economic landscape, attracting attention from three key groups: the government, banks, and investors The government aims to mobilize capital for economic development, much of which is currently held in gold by households Meanwhile, banks seek to boost their deposit funds through gold-related financial services offered to Vietnamese households Additionally, investors are keen to understand the factors driving gold price volatility in Vietnam.
While numerous studies have explored the gold market in Vietnam, the majority focus on empirical research related to gold prices and macroeconomic issues (Hoang, 2004; Hau et al., 2013; Sy, 2011; Lai, 2011) However, there is a notable absence of micro-level studies examining the investment behaviors of Vietnamese households towards gold Although some research has been conducted in other countries (Maheran et al., 2008; Lutter, 2008; Hundal et al., 2013), cultural differences may limit the applicability of these findings to Vietnam This study aims to address this gap by investigating the factors that influence Vietnamese households' intentions to invest in gold.
Objectives and Aims
Based on above problem statement, this study aims at following objectives:
(1) To find out the investment behaviors toward gold of Vietnamese people
(2) To explore what factors affecting intention to invest in gold in Vietnam.
Research scope
This study focuses on Ho Chi Minh City (HCMC), the economic hub of Vietnam, which offers a diverse demographic and a vibrant gold market with numerous licensed institutions Utilizing a questionnaire survey method, the research aims to gain an in-depth understanding of the factors influencing individual investment decisions in gold.
Significance of research
This research represents the first attempt to investigate investment behaviors related to gold in Vietnam Gold holds a significant position in the global financial system, with its value largely influenced by fundamental human needs Understanding the motivations driving gold demand in developing countries like Vietnam can provide insights into long-term gold demand trends.
This research plays a crucial role in Vietnam's policy-making process regarding the regulation of the gold market The substantial gold imports negatively affect Vietnam's trade balance and create challenges for exchange rate management Therefore, understanding the reasons behind the Vietnamese affinity for gold is essential for effectively controlling the gold market and mitigating its economic impact.
Thesis structure
This paper is organized as follow:
Chapter 1: this chapter present the history of gold demand in the world and in Vietnam market, as well as discusses about the problem faced by Vietnam government about gold demand
Chapter 2: this chapter present the theoretical perspectives of the research, context and the factors that matters
Chapter 3: this chapter present the research method, the way of setting up the measures and conducting the survey This part includes: qualitative and quantitative approach to the research
Chapter 4: this chapter designed to present the results of research and discuss the main finding
Chapter 5: this chapter is for conclusion and some issues related to this research.
Review of Literature
Intention to invest in gold
Investing is a complex process that involves strategically allocating money or capital to increase wealth, as noted by Ackert and Deaves (2010) Many individuals are taught that the only way to earn money is through traditional employment, leading to the common dilemma of working overtime for additional income This often results in having money but lacking the time to enjoy it To overcome this challenge, individuals can invest their money, allowing it to generate income while they engage in other activities, such as working, relaxing, or socializing By making smart investment choices, one can enhance their earning potential without solely relying on higher wages or additional work hours.
Investment should not be equated with gambling, as gambling involves betting on uncertain outcomes with the hope of earning money based on luck The confusion between the two often arises from individuals who make impulsive investment decisions based on rumors, rather than conducting thorough financial analysis Such behavior mirrors that of a gambler placing bets in a casino, highlighting the importance of informed decision-making in investment practices.
Expectation theory suggests that investors prioritize mitigating losses over maximizing profits When faced with potential gains, they tend to secure immediate profits rather than hold out for larger returns Conversely, in situations where investments are at risk of loss, investors cling to the hope of future recovery, despite the heightened risk They react to positive market signals by buying assets and quickly selling them as prices rise, achieving their desired profitability without seeking further gains, as they believe current asset prices accurately reflect all expected information.
The "adverse risk theory" highlights the asymmetric psychology of investors, illustrating how they perceive potential losses as significantly more impactful than potential gains Empirical evidence indicates that individuals often experience "loss pain" much more acutely than the pleasure of "profit gain." This phenomenon explains why investors frequently hold onto losing positions in the hope of a price recovery, leading to prolonged periods of asset retention despite declining values.
Mental accounting theory offers valuable insights into investor behavior, highlighting how individuals tend to compartmentalize their financial decisions into separate "virtual accounts" in their minds This separation leads to independent decision-making without considering the interconnections among these accounts As a result, investors may arrive at seemingly rational conclusions, but these decisions can be flawed, as real-world events are often interconnected.
Psychological tests indicate that individuals often overestimate their abilities compared to others, leading to an inflated sense of confidence This overconfidence can boost investment activity, as investors become more inclined to act on their beliefs while disregarding insights from others Consequently, overconfident investors tend to view their decisions as less risky than those made by their peers Additionally, these investors may misinterpret the value of the information they encounter, resulting in a misunderstanding of both its authenticity and its relevance.
The conservative theory suggests that investors often react slowly to changing economic conditions, clinging to perceptions from earlier periods When faced with signs of economic decline, they tend to view it as a temporary setback, failing to recognize the onset of a cyclical downturn As time passes without improvement, panic sets in, leading to a rush to sell assets, which ultimately results in unexpected market fluctuations.
The "herd" effect significantly influences investor decision-making, regardless of their experience level This psychological phenomenon is particularly evident when investors face pressure to make quick decisions without sufficient information In such situations, individuals often conform to the group's opinions, believing that the majority cannot be wrong, leading them to alter their own judgments.
Intention, as defined by Fishbein and Ajzen (1975) and Gopi and Ramayah (2007), refers to an individual's perception of the likelihood of engaging in a specific behavior For individual investors, their intention to invest in a particular financial instrument is significantly influenced by their attitudes toward the perceived characteristics of that instrument Investors are likely to consider investing only when they possess the necessary time, skills, and financial resources Consequently, when forming their investment intentions, individuals typically evaluate various factors related to the investment while also allowing their emotional perceptions to influence their decision-making process In this context, the intention to invest is characterized as a "will without force," indicating that the individual makes investment decisions without external pressure.
Gold investment encompasses various forms, including gold bars and public offerings like smooth rings and gold certificates While numerous studies focus on gold prices and macroeconomic factors, research specifically examining investment behaviors related to gold remains scarce Although some international studies, such as Maheran (2008), have explored public acceptance of gold coins, the investment potential of this asset has not been thoroughly investigated.
Factors affect intention to invest in gold
The ongoing tensions between a home country and other nations often drive investors to select gold as a safe asset due to its universal acceptance Recent disputes in the East Sea, known globally as the South China Sea, particularly between Vietnam and China, have introduced volatility into the gold market In response, the State Bank has taken measures to stabilize market sentiment.
In Vietnam, frequent news coverage of gold in daily newspapers encourages many small investors to speculate in the gold market (Phu, 2010) This media influence significantly boosts potential investors' awareness of available products and services (Karrh et al., 2003) However, some investors remain uninformed about investment alternatives due to insufficient information in media channels.
Investing in gold is a popular strategy for portfolio diversification, as it typically has a low correlation with other asset types, helping to mitigate overall investment risk (Baur and Lucey, 2010) In Vietnam, individuals commonly have four investment options: real estate, gold, stocks, and savings deposits (Vy, 2014) Consequently, gold serves as an effective investment vehicle for those looking to diversify their portfolios.
Investing in gold offers the appeal of high long-term returns, as it is a non-renewable commodity that remains in existence indefinitely Unlike other assets, gold is often stored rather than circulated, leading to a supply that cannot keep pace with the increasing demand from a growing population While gold prices may experience significant volatility in the short term, they tend to provide more favorable returns over a longer investment horizon of at least six months compared to other assets (Ronapat, 2007).
Gold investment offers a significant advantage due to the absence of tax liabilities when selling gold assets, unlike other investment vehicles such as stocks and real estate, which are subject to income tax This tax-free status makes gold an attractive option for investors seeking to diversify their portfolios.
Macroeconomic news and gold prices are closely correlated on a global scale, with substantial evidence indicating that gold prices are highly sensitive to macroeconomic indicators (Roache and Marco, 2009).
Macroeconomic indicators play a crucial role in shaping investor decisions, yet only a handful are widely recognized by the public Ruta and Anjali (2014) identify five key economic indicators that significantly influence market investors: the price index, gross domestic product (GDP) growth, exchange rate, foreign investment, and the money supply.
Gold plays a crucial role in hedging against inflation, particularly in Vietnam, where there is a strong correlation between gold prices and the price index Research indicates that investors often turn to gold as a disinflation instrument, driven by the belief that it yields higher returns during inflationary periods Moreover, gold possesses unique characteristics that make it a more effective hedge compared to traditional financial assets like stocks and bonds.
In recent years, the VND/USD exchange rate has consistently depreciated, prompting domestic investors to consider purchasing foreign currency for investment Consequently, many are turning to gold as a hedge against the declining value of the domestic currency (World Gold Council, 2014).
Foreign investment significantly enhances a country's economic performance, leading to greater stability in gold prices by fostering confidence in economic growth Additionally, foreign investment influences gold prices through the exchange rate channel; as investments increase, a country accumulates more foreign currency, further impacting the value of gold.
Changes in the money supply significantly influence inflation and exchange rates, which in turn affects gold prices When the government increases the money supply, it often triggers negative reactions among the public, as this is perceived as a sign of ineffective monetary policy, leading to a cascade of unfavorable consequences.
In the gold market, a common belief is that increased insecurity boosts gold prices However, defining insecurity and security can be complex Friedewald et al (2014) identify seven perspectives of security that individuals encounter, highlighting the multifaceted nature of these concepts in relation to market dynamics.
Physical security deals with someone feeling about safety of physical characteristics of themselves or the system, place or property
Political security deals with the feeling of protection of personal rights including property right, license right, home rights or feeling to be protected by laws, policy, institutions
Socio-economic security deals with the feeling that economic system operating right and stable, without crisis or foreseen failures
Cultural security deals with feeling to be protect if someone have different cultural background such as language, religion, or birth sources area
Environmental security deals with feeling to be safe with natural condition, weather disaster, or natural disaster caused by human or by chance
Radical uncertainty security focuses on measures aimed at safeguarding individuals from exceptional and rare threats that are not intentionally caused by any external or internal agents, yet possess the potential to significantly diminish quality of life.
Information security deals with feeling to be safe with current information system such as free of hacker, virus or something to steal personal information and harm the information system
Investment vehicles often gain popularity and preference despite lower profitability due to their convenience As highlighted by Chang & Polonsky (2012), convenience refers to minimizing consumers' non-monetary costs, such as time, energy, and effort, when purchasing or utilizing goods and services There are five distinct types of convenience that contribute to this phenomenon.
Decision convenience plays a crucial role for consumers when selecting a service, particularly in a market with numerous providers and delivery options People tend to favor goods or services with fewer choices, perceiving a lower opportunity cost compared to alternatives For instance, gold emerges as a more appealing investment choice relative to real estate or stocks, which present a wider array of options.
Method and Data
Theorical model
Based on aboved dicussion (section 2.2) , the model is contructed as follows:
Hypothesis
According to the literature review in section 2.2, the author argues that all four factors in the research model positively influence the dependent variable Below is a detailed breakdown of the research hypotheses.
Intention to invest in gold Macroeconomic Concern
Hypothesis 1 (H1): Perceived economic benefits have positively related to Intention to Investing gold
Hypothesis 2 (H2): Unexpected Macroeconomic Concern have positively related to Intention to Investing gold
Hypothesis 3 (H3): Perceived insecurity have positively related to Intention to Investing gold
Hypothesis 4 (H4): Convenience have positively related to Intention to Investing gold.
Qualitative research
Qualitative research aims to investigate the factors influencing individuals' intentions to invest in gold while validating theoretical constructs used in surveys Interviews were conducted in a comfortable setting to facilitate open discussions about gold investment The study involved ten participants, with five intending to purchase gold for investment purposes and the other five currently holding gold as a form of wealth.
The interview began with an introduction to the organization and the research's purpose, clearly outlining the interviewees' roles Emphasis was placed on providing information that would positively influence the respondents' perspectives Prior to the interview, participants were assured that their responses would remain confidential.
Effective interview questions often begin with general expressions like "Glad to meet you, how are you today?" or "Your dress is fashionable, where did you buy it?" These open-ended inquiries encourage interviewees to share their thoughts more freely, allowing for deeper insights during the conversation To ensure unbiased responses, the interviewer refrained from sharing personal opinions on the topics discussed Specific question formats were employed, such as "Can you tell me about the gold in Vietnam?" and "Why do you choose gold as an investment?" to elicit detailed perspectives on the subject, including public sentiment regarding gold purchases.
Following in-depth interviews with respondents, a sample questionnaire was developed to enhance understanding of the questions posed The questionnaire was structured to ensure clarity and consistency for the majority of respondents Additionally, participants were asked for feedback on the cover letter to ensure it was polite and fostered a comfortable atmosphere.
The ambiguous language in the questions has been revised to ensure clarity and comprehension for interviewees The final measurement items now feature straightforward content that is easy to understand For further details, please refer to Appendix A.
Measurement
This part present the measurement scales for factors to be used in this research
Perceived Economic Benefits based on Nik Maheran (2011)
Are you agree with the following: (1 Strongly disagree; 2 Disagree; 3 Disagree somewhat; 4 Neutral; 5 Agree somewhat; 6 Agree; 7 Strongly agree)
1 Gold have high liquidity compare with other investment vehicles
2 Gold have higher profitability than other investment vehicle ECO2
3* I don’t have to pay income tax when selling gold ECO3
4 I buy gold because gold is a safe investment ECO4
5 I think gold price will increase in the future ECO5
6 I buy gold because it is accepted internationally ECO6
7 I buy gold to diversify my portfolio investment ECO7
Macroeconomic Concern - based on Khaparde & Bhute (2014)
Are you agree with the following: (1 Strongly disagree; 2 Disagree; 3 Disagree somewhat; 4 Neutral; 5 Agree somewhat; 6 Agree; 7 Strongly agree)
1 The inflation rate will be higher in the coming period MAC1
2 I think the economic growth will be slowdown MAC2 depreciate in the future
4 The foreign investment flows will decrease in future MAC4
5 The money supply will increase in the future MAC5
Perceived Insecurity – based on Friedewald et al (2014)
Do you worry about each of following (1 Strongly disagree; 2 Disagree; 3 Disagree somewhat; 4 Neutral; 5 Agree somewhat; 6 Agree; 7 Strongly agree)
3 Being a victim of a theft SEC3
5 Being a victim of terrorist attack SEC5
6 Immigrant moving to live next to your house SEC6
7 Being a victim of a natural disaster SEC7
8 Someone hacking your computer SEC8
Convenience – based on Chang & Polonsky (2012)
Are you agree with the following: (1 Strongly disagree; 2 Disagree; 3 Disagree somewhat; 4 Neutral; 5 Agree somewhat; 6 Agree; 7 Strongly agree)
1 I easily to find a physical store to buy/sell gold CON1
2 I could buy/sell gold at anytime I want CON2
3 I could use any method of payment as to buy/sell gold as I want
4 It take very little time to decide to buy/sell gold CON4
5 If I change my mind after make purchase I could resell gold without any difficulties
Intention to invest in gold - based on Dodds et al (1991)
Are you agree with the following: (1 Strongly disagree; 2 Disagree; 3 Disagree somewhat; 4 Neutral;5 Agree somewhat; 6 Agree; 7 Strongly agree)
1 There is high probability that I will invest in gold in next three month
3 I want to invest in gold in the next three month INT3
Sample
In this study, we aim to analyze the factors influencing individual investment decisions in gold, targeting at least 140 participants in Ho Chi Minh City (HCMC) based on the recommendation by Hundal (2013) to have a minimum of five interviewees per variable HCMC offers a diverse demographic structure, representing a wide range of individuals from across the country, and features a vibrant gold market with numerous licensed institutions Utilizing a questionnaire survey method, we distributed 300 questionnaires and received 247 valid responses, achieving an 82.3% return rate through convenient sampling.
Data Analysis steps
After checking for error and valid of raw data, the proposed procedures for this study is as follows:
Step 1 : Checking measurement reliability by Cronbach alpha criteria
Step 2 : Using Factor Analysis (EFA- Explatory Factor Analysis) for checking factor structure of data
Step 3: Appling multiple regression to explore the determinant weight of factors
Chapter 4: Data Analysis and Results
This section outlines the descriptive statistics, reliability assessment, and hypothesis testing The reliability of the data will be evaluated using Cronbach’s alpha and exploratory factor analysis (EFA) Subsequently, the hypotheses regarding the impact of various factors on investment intention will be tested using the gathered data.
The data analysis sample comprises 247 individuals, with a gender distribution of 51% male and 49% female Among the participants, 70% are single and 30% are married Age distribution reveals that 0.4% are under 20, 15.4% are between 20-30, 34% are aged 31-40, 36.8% fall within the 41-50 age range, and 13.2% are over 50 Income levels are varied, with 64.8% earning between 5-15 million VND per month and 30% earning more than 15 million VND monthly Educational attainment shows that 51.4% have an undergraduate degree, while 27.1% hold a high school diploma Career sectors are equally represented, with 42.5% employed in public and 42.5% in private sectors Notably, 61.5% of participants have previously invested in gold, primarily purchasing from jewelry shops (57.5%) and banks (30.8%).
Data reliability test with Cronbach’s Alpha
The reliability of the scale was evaluated using Cronbach's alpha coefficient to measure internal consistency This method helps eliminate unsuitable variables before conducting exploratory factor analysis (EFA), ensuring that only relevant elements are retained for accurate results.
Cronbach's coefficient alpha indicates whether items are correlated but does not specify which variables should be retained In contrast, calculating the correlation coefficient between variables aids in identifying and eliminating those that do not significantly contribute to the measurement of the intended concept.
The criteria used to evaluate the reliability scale:
- Eliminate the observed variables whose correlation coefficient with sum variable less than 0.3; the larger Alpha the higher the internal consistency reliability (Nunally & Burnstein,
An Alpha value greater than 0.8 indicates a strong measurement scale, while values between 0.7 and 0.8 are considered acceptable An Alpha value of 0.6 or higher may be utilized when dealing with new concepts or contexts in research, according to Nunally (1978) and Peterson (1994).
- The observed variables which have small correlation coefficient with variables-total small (less than 0.4) is considered to be removed and the scale is accepted if Alpha coefficient greater than 0.7
Table 2 presents the Cronbach's alpha results for each construct, revealing that all scales exhibit alpha values exceeding 0.8, with a range from 0.854 for Perceived Insecurity to 0.936 for Perceived Economic Benefits These findings indicate that the constructs are reliable and appropriate for factor analysis.
Table 2: Cronbach’s alpha of measurement scales
Scale Mean if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
Exploratory Factor Analysis (EFA)
Exploratory Factor Analysis (EFA) is utilized to uncover the hidden factor structures within a dataset without imposing a predefined structure The analysis of Cronbach’s alpha indicates that the data is suitable for EFA evaluation This research will assess the consistency of factor structures through EFA, employing "principal axis factoring" with rotation to enhance the analysis.
Before conducting Exploratory Factor Analysis (EFA) on "promax," it is essential to assess data adequacy The results from the KMO and Bartlett’s test, with a p-value of less than 0.001, confirm that the data is suitable for factor analysis.
Kaiser-Meyer-Olkin Measure of Sampling Adequacy .872 Bartlett's Test of
Initial Eigenvalues Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings a Total % of Variance Cumulative % Total % of Variance Cumulative % Total
Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance
Extraction Method: Principal Axis Factoring
Rotation Method: Promax with Kaiser Normalization a Rotation converged in 5 iterations
Based on the above result we can see that KMO=0.872 that is larger than 0.7 and significant coefficient less than 0.001, this is suitable to do factor analysis
The exploratory factor analysis (EFA) conducted in this research utilized principal axis factoring with promax rotation, revealing that the five identified factors account for a cumulative variance of 63.68% The respective contributions of these factors are as follows: the first factor at 18.537%, the second at 15.496%, the third at 12.154%, the fourth at 11.86%, and the fifth at 5.64% Notably, all factor loadings exceed 0.5, confirming the validity of the EFA results.
According to the result of analysis shows in Component Matrix (a), all variable have loading factor coefficient bigger than 0.5 that meets the requirement.
Regression analysis
This study investigates the impact of four key factors—Economic Benefits, Macroeconomic Concern, Perceived Insecurity, and Convenience—on Investment Intention using an ordinary least squares estimator The regression analysis incorporates the cumulative values of these component items Table 4 verifies that the independent variables are free from multicollinearity, ensuring the validity of the regression results.
SUM_INT SUM_ECO SUM_MAC SUM_SEC SUM_CON
** Correlation is significant at the 0.01 level (2-tailed)
Table 5 indicates that four key factors—Economic Benefits, Macroeconomic Concern, Perceived Insecurity, and Convenience—account for 17% of the variance in Investment Intention, as reflected by the Adjusted R² coefficient The model's adequacy is confirmed with an F-value of 14.095, which is statistically significant at the 1% level.
Std Error of the Estimate
1 428 a 183 170 2.348 a Predictors: (Constant), SUM_CON, SUM_ECO, SUM_SEC,
Model Sum of Squares df Mean Square F Sig
Total 1633.830 246 a Dependent Variable: SUM_INT b Predictors: (Constant), SUM_CON, SUM_ECO, SUM_SEC, SUM_MAC
Table 6 show the regression result of the research model The standardized coefficients (beta) indicate the importance of effects of each factor on dependent variable The beta of
The analysis reveals that "Macroeconomic Concern" has the strongest impact with a beta value of 0.344, followed by "Economic Benefits" at 0.203 and "Perceived Insecurity" at 0.116 The variable with the least effect is "Convenience," which has a beta value of 0.083 Most beta values are statistically significant at the 1% and 5% levels, with the exception of one variable.
“Convenience” Based on the result of significant ratio, we could confirm the hypotheses 1, 2, 3; but do not have enough evidence to accept hypothesis 4
SUM_CON 045 032 083 1.414 159 a Dependent Variable: SUM_INT
Conclusion about hypotheses proposed are summarized in the table 7
Table 7: Summary of hypothesis testing
H1: Perceived economic benefits have positively related to Intention to Investing
H2: Macroeconomic Concerns have positively related to
H3: Perceived insecurity have positively related to Intention to Investing
H4: Convenience have positively related to Intention to Investing
Discussion of findings
A study conducted with 247 working individuals aged 20-50 in Ho Chi Minh City reveals significant findings regarding investment motivations The research indicates that "Macroeconomic Concern," with a beta of 0.345, has the strongest influence on individuals' decisions to invest in gold, driven by their overall economic apprehensions This response to macroeconomic news aligns with previous research findings (Dooley et al., 1995; Rohan et al.).
In response to recent global market turmoil, the Vietnamese government has implemented a "prudent macro policy" to stabilize the economy This approach acknowledges the sensitivity of the Vietnamese market to negative news, particularly regarding speculation in the foreign currency and gold markets Research has confirmed this vulnerability within the context of the gold market in Vietnam.
Investing in gold offers significant economic benefits, particularly in developing countries with a high likelihood of inflation As a result, gold remains an appealing investment option The positive perception of potential profits from gold investment serves as a strong motivation for individuals to invest, a finding supported by research (Nik Maheran, 2011).
Rising insecurity often drives individuals to invest in gold, as increased concerns for personal safety enhance the motivation to seek safe-haven assets This study is the first to explore the link between perceived insecurity and the intention to invest in gold While individuals may also consider other secure investments like bonds or reserve currencies, the lack of an official foreign currency market for individuals in Vietnam, coupled with a nascent and illiquid bond market, makes gold a more attractive option during times of societal unease.
The surprising finding of this research is that "Convenience" does not significantly impact the "Intention to Invest" in gold among Vietnamese consumers This suggests that Vietnamese individuals prioritize factors beyond convenience when purchasing gold, viewing it as a unique asset Consequently, the typical consumer behavior associated with other goods and services does not apply to gold transactions, indicating that efforts to enhance service convenience for gold buyers may be less effective.
Conclusion
Conclusion
In Vietnam, gold has long been a traditional asset for wealth accumulation, driven by cultural factors similar to those in other Asian countries The country requires capital for economic development, yet a significant portion of this capital is held in the form of gold within households, with estimates suggesting that hundreds of tons of gold are stored by Vietnamese families Many individuals use gold as a hedge against inflation, which poses a risk to their wealth However, the high demand for gold has created challenges for the economy, as gold imports have contributed to a trade balance deficit in recent years.
The gold market plays a crucial role in Vietnam's economy, yet existing studies primarily focus on empirical research related to gold prices and macroeconomic factors This study aims to address the gap by exploring the factors that influence Vietnamese households' decisions to invest in gold Conducted in Ho Chi Minh City (HCMC), the economic hub of Vietnam, the research benefits from the city's diverse demographic and its vibrant, accessible gold market, which boasts numerous licensed institutions.
This study is conducted by survey 247 individuals to explore in-depth understanding of factors affecting decision to invest in gold of individuals
This research investigates the influence of four key factors—Economic Benefits, Macroeconomic Concern, Perceived Insecurity, and Convenience—on the intention to invest in gold The findings reveal that Economic Benefits, Macroeconomic Concern, and Perceived Insecurity significantly affect individuals' intentions to invest in gold.
Investing in gold in Vietnam offers significant economic benefits due to its unique characteristics compared to other investment options Gold is globally recognized as a safe asset and is highly liquid, reflecting its cultural significance It serves as a diversified solution for wealth preservation and typically provides high long-term returns due to its scarcity Additionally, trading gold can offer tax advantages Research indicates that these factors play a crucial role in influencing the intention to invest in gold, with a standardized coefficient of effect of 0.203.
Macroeconomic concerns encompass individuals' perceptions regarding the price index, GDP growth, exchange rates, foreign investment, and the money supply within their country Research findings indicate that these factors play a crucial role in influencing the intention to invest in gold, with a standardized coefficient of effect of 0.344.
Perceived insecurity encompasses individuals' feelings regarding seven dimensions of security: physical safety, political stability, socio-economic conditions, cultural shifts, environmental concerns, radical uncertainty, and information security Research findings indicate that perceived insecurity plays a significant third-order role, with a standardized effect coefficient of 0.16, in influencing the intention to invest in gold.
The perception of convenience in gold investing encompasses several aspects, including decision-making, access, transactions, benefits, and post-benefit convenience However, research indicates that this factor has an insignificant impact on individuals' intentions to invest in gold The author argues that Vietnamese consumers prioritize other factors over convenience when purchasing gold, viewing it as a unique asset, which diminishes the perceived value of enhanced service for this particular market.
Implications
This research is significant for three key stakeholders: the government, banks, and investors The government aims to boost capital for economic development, which is currently held in the form of gold by the population Therefore, it is crucial to understand the factors that motivate individuals to hold onto their gold assets.
Research indicates that the Vietnamese government should consider implementing policies to regulate gold demand, particularly through taxation Currently, gold trading in Vietnam is not subject to income tax, allowing many individuals to profit daily from gold transactions without tax obligations, unlike other investment options such as stocks or real estate Additionally, economic stability plays a crucial role in positioning gold as a safe haven for wealth protection The perception of personal security further contributes to gold's popularity as an investment vehicle; therefore, enhancing the overall security of the living environment is essential to mitigate this inclination toward gold investment.
Banks in Vietnam are seeking to increase deposit funds through gold-related financial services aimed at local households Understanding clients' intentions regarding gold can enhance their success in delivering these services Meanwhile, investors are keen to explore the factors driving gold price volatility in Vietnam, as insights into the behaviors of other market participants can help optimize their profitability.
Research limitation
A key limitation of this research is the sample size, which was constrained by limited resources and time As a result, the study could not encompass a representative sample from all regions of Vietnam Future research should aim to include a larger dataset across all provinces in Vietnam to validate the consistency of these findings.
Future research should focus on how gold price volatility influences consumer intentions The varying impacts of rising and falling gold prices on purchasing decisions necessitate tailored strategies that respond to specific price fluctuations.
Ackert, L F., & Deaves, R (2010) Behavioral finance: Psychology, decision-making, and markets Mason, OH: South-Western Cengage Learning
Ajzen, I., & Fishbein, M (2000) Attitudes and the Attitude-Behavior Relation: Reasoned and
Automatic Processes European Review of Social Psychology, 11(1), 1-33
Avery, C & Zemsky, P (1998) Multidimensional Uncertainty and Herd Behavior in Financial
Baur, D G., & Lucey, B M (2010) Is Gold a Hedge or a Safe Haven? An Analysis of Stocks,
Bonds and Gold Financial Review, 45(2), 217-229
In "The Power of Gold: The History of an Obsession," Bernstein (2000) explores the enduring allure and historical significance of gold, highlighting its impact on human behavior and society Additionally, Chang and Polonsky (2012) investigate the effects of various types of service convenience on consumer behavior within the Taiwanese leisure industry, emphasizing the crucial mediating role of consumer satisfaction in shaping behavioral intentions These studies collectively underscore the profound influence of both material wealth and service quality on consumer experiences and decision-making processes.
Christie–David, R., Chaudhry, M., & Koch, T W (2000) Do macroeconomics news releases affect gold and silver prices? Journal of Economics and Business, 52(5), 405-421 Cuc, N.T.K, & Reza, Y.S (2013) Inflationary Implication of Gold Price in Vietnam CAMA
Working Paper 20/2013 Crawford School of Public Policy Australian National University
Dodds, W B., Monroe, K B., & Grewal, D (1991) Effects of Price, Brand, and Store
Information on Buyers' Product Evaluations Journal of Marketing Research, 28(3), 307
Dooley, M P., Isard, P., & Taylor, M P (1995) Exchange rates, country-specific shocks, and gold Applied Financial Economics, 5(3), 121-129
Fishbein, M., & Ajzen, I (1975) Belief, attitude, intention, and behavior: An introduction to theory and research Reading, MA: Addison-Wesley Pub
Fishbein, M., & Ajzen, I (2010) Predicting and changing behavior: The Reasoned Action
Approach New York: Taylor & Francis
Friedewald, M., Lieshout, M V., Rung, S., Ooms, M., & Ypma, J (2015) Privacy and
European citizens' perceptions of security reveal significant insights into the trade-off model, highlighting the balance between privacy and safety This study, featured in the IFIP Advances in Information and Communication Technology series, emphasizes the critical role of privacy and identity management in the context of globalization Understanding these perceptions is essential for developing strategies that address the evolving challenges of the future internet.
Gold investment (n.d.) [Online article] Retrieved from http://www.ukessays.com/essays/project-management/gold-investment.php
Hoang, V.Q (2004) Analyses on Gold and US Dollar in Vietnam's Transitional Economy
Working Papers CEB 04-033.RS, ULB Universite Libre de Bruxelles
Hofstede, G (2010) Vietnam’s five dimensions of culture [Online] Retrieved from http://geert-hofstede.com/vietnam.html
Hundal, D B (2013) Herd Behaviour and Gold Investment: A Perceptual Study of Retail
Investors IOSR Journal of Business and Management IOSR-JBM, 15(4), 63-69
Karrh, J A., Mckee, K B., & Mckee, C J (2003) Practitioners' evolving views on product placement effectiveness Journal of Advertising Research JAR, 43(2), 138-149
Khaparde, R., & Bhute, A (2014) Investors' Perception towards Impact of Macroeconomic
Performance on Stock Market Behavior International Journal of Management, 2(1), 71-
Research has highlighted the intricate relationships between various economic factors and gold prices Lai (2011) explores the connections between gold prices, the VND/USD exchange rate, real estate prices, stock prices, and interest rates, offering insights into market dynamics during 2006 In a different study, Long et al (2013) examine gold's role as a hedge against inflation specifically in the Vietnamese context, emphasizing its significance in economic stability Additionally, Lutter (2008) investigates consumer behavior regarding gold investments compared to other investment instruments, providing a comprehensive understanding of investment trends These studies collectively underscore the importance of gold in financial markets and its multifaceted role as an investment vehicle.
Maheran, N.M., Nursuzila W.M., & Aspiyati, J (2008) Dinar Emas Investment : Factors influencing Acceptance Level of the Kelantanese East Coast Economic Region (ECER)
Mussweiler, T., & Schneller, K (2003) "What Goes Up Must Come Down"-How Charts
Influence Decisions to Buy and Sell Stocks Journal of Behavioral Finance, 4(3), 121-
National Mining Association (n.d.) The history of Gold [PDF file] Retrived May, 10 2014, from www.nma.org/pdf/gold/gold_history.pdf
Ng, L., & Wu, F (2010) Peer Effects in the Trading Decisions of Individual Investors
Nhu, Q., & Trang, Y (2014, May 1) Purchase gold and foreign currency: how to be legal?
[Online version] Ho Chi Minh City Law Newspaper Retrive May, 10 2014, from http://plo.vn/epaper/2014/111/
Nik-Maheran, N M (2011) Public Acceptance Towards Kelantan Gold Dinar Business &
Pascual-Ezama, D., Scandroglio, B., & Liaủo, B G (2014) Can we predict individual investors’ behavior in stock markets? A psychological approach Universitas Psychologica Univ Psychol, 13(1)
Pellinen, A., Tửrmọkangas, K., Uusitalo, O., & Munnukka, J (2015) Beliefs affecting additional investment intentions of mutual fund clients J Financ Serv Mark Journal of Financial Services Marketing, 20(1), 62-73
Phu, N.V (2010, November 10) How to behave with gold? The Sai Gon Times Retrieved from http://www.baomoi.com/Ung-xu-nhu-the-nao-voi-vang/126/5178942.epi
Shaun K R., & Marco, R (2009) The Effects of Economic News on Commodity Prices:Is
Gold Just Another Commodity? IMF Working paper
Son, N (2014, May 21) Do not dwell to speculation, should sell gold for cash collection
Vietnamnet Online Newspaper Retrived from http://vietnamnet.vn/vn/kinh- te/176550/dung-xoay-theo-dau-co nen-ban-vang-thu-tien.html
Sy, N.V (2011) Application of probability model to analyzing gold prices Journal of
Vietnamese citizens are incurring significant financial losses, amounting to thousands of billions, due to the mismanagement of gold reserves This issue highlights the economic challenges faced by the country and raises concerns about the impact on individual wealth and national financial stability.
Vy, T (2014, April 21) Real estate, gold, stocks, or saving deposits? Thanh Nien News
Retrieved from http://www.thanhnien.com.vn/pages/20140420/bat-dong-san-vang- chung-khoan-hay-gui-tiet-kiem.aspx
World Bank (2013) Worldwide Governance Indicators [PDF file] Retrieved from http://info.worldbank.org/governance/wgi/pdf/c234.pdf
World Gold Council (2014, Feb) Gold demand trends: Full year 2013 [PDF file] Retrived
May, 10 2014, from http://www.gold.org/sites/default/files/GDT_Q4_2013.pdf
Worthington, A.C., & Pahlavani, M (2006) Gold investment as an inflationary hedge:
Cointegration evidence with allowance for endogenous structural breaks University of Wollongong School of Accounting and Finance Working Paper Series No 06/05
I am currently conducting research at the International School of Business (ISB) for my master's thesis, focusing on the factors that influence the intention to invest in gold I would greatly appreciate your support by taking a few minutes to complete this questionnaire Please remember that there are no right or wrong answers; your responses should reflect your true feelings.
- Career: Private Officer Public officer Private business owner Others
- Income per month (million VND): 20
- Education: High school diplomat Undergraduate Graduate Doctorate
- Gold investment experience: Yes No
- Place to buy gold: Jewelry shop Banks Others
With the following statements, please check cross (X) the number that most fits your opinion (Anchored by: 1 strongly disagree; 2 Disagree; 3 Disagree somewhat; 4 Neutral; 5 Agree somewhat; 6 Agree; 7 Strongly agree)
Please give your opinion about benefits of investing in gold:
1 Gold have high liquidity compare with other investment vehicles 1 2 3 4 5 6 7
2 Gold have higher profitability than other investment vehicle 1 2 3 4 5 6 7
3 I don’t have to pay income tax when selling gold 1 2 3 4 5 6 7
4 I buy gold because gold is a safe investment 1 2 3 4 5 6 7
5 I think gold price will increase in the future 1 2 3 4 5 6 7
6 I buy gold because it is accepted internationally 1 2 3 4 5 6 7
7 I buy gold to diversify my portfolio investment 1 2 3 4 5 6 7 Please give your opinion about following macroeconomic concerns:
8 The inflation rate will be higher in the coming period 1 2 3 4 5 6 7
9 I think the economic growth will be slowdown 1 2 3 4 5 6 7
10 The Vietnamese currency exchange rate with USD will depreciate in the future 1 2 3 4 5 6 7
11 The foreign investment flows will decrease in future 1 2 3 4 5 6 7
12 The money supply will increase in the future 1 2 3 4 5 6 7 Please give your opinion if you worry about:
17 Being a victim of terrorist attack 1 2 3 4 5 6 7
18 Immigrant moving to live next to your house 1 2 3 4 5 6 7
19 Being a victim of a natural disaster 1 2 3 4 5 6 7
Please give your opinion about following statement:
21 I easily to find a physical store to buy/sell gold 1 2 3 4 5 6 7
22 I could buy/sell gold at anytime I want 1 2 3 4 5 6 7
23 I could use any method of payment as to buy/sell gold as I want 1 2 3 4 5 6 7
24 It take very little time to decide to buy/sell gold 1 2 3 4 5 6 7
25 If I change my mind after make purchase I could resell gold without any difficulties 1 2 3 4 5 6 7
Please give your opinion about Intention to invest in gold:
26 There is high probability that I will invest in gold in next three
27 I would consider investing in gold in next three month 1 2 3 4 5 6 7
28 I want to invest in gold in the next three month 1 2 3 4 5 6 7
Thank you for your answers We will deliver research result as your demand
ECO1 Gold have high liquidity compare with other investment vehicles
ECO2 Gold have higher profitability than other investment vehicle Scale
ECO3 I don’t have to pay income tax when selling gold Scale
ECO4 I buy gold because gold is a safe investment Scale
ECO5 I think gold price will increase in the future Scale
ECO6 I buy gold because it is accepted internationally Scale
ECO7 I buy gold to diversify my portfolio investment Scale
MAC1 The inflation rate will be higher in the coming period Scale
MAC2 I think the economic growth will be slowdown Scale
MAC3 The Vietnamese currency exchange rate with USD will depreciate in the future
MAC4 The foreign investment flows will decrease in future Scale
MAC5 The money supply will increase in the future Scale
SEC1 Getting serious sick Scale
SEC2 Losing your job Scale
SEC3 Being a victim of a theft Scale
SEC5 Being a victim of terrorist attack Scale
SEC6 Immigrant moving to live next to your house Scale
SEC7 Being a victim of a natural disaster Scale
SEC8 Someone hacking your computer Scale
CON1 I easily to find a physical store to buy/sell gold Scale
CON2 I could buy/sell gold at anytime I want Scale
CON3 I could use any method of payment as to buy/sell gold as I want
CON4 It take very little time to decide to buy/sell gold Scale
CON5 If I change my mind after make purchase I could resell gold without any difficulties
INT1 There is high probability that I will invest in gold in next three month
INT3 I want to invest in gold in the next three month Scale
ECO Economic benefits from investing in gold Sum of
MAC Macroeconomic concerns Sum of
SEC Perceived insecurity Sum of
CON Convenience to invest Sum of
INT Intention to invest Sum of
Appendix C: EFA results of independent and dependent variables
Kaiser-Meyer-Olkin Measure of Sampling Adequacy .872
Bartlett's Test of Sphericity Approx Chi-Square 4705.844 df 378
Extraction Method: Principal Axis Factoring
Initial Eigenvalues Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings a Total % of Variance Cumulative % Total % of Variance Cumulative % Total
Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance
Extraction Method: Principal Axis Factoring a 5 factors extracted 7 iterations required
Extraction Method: Principal Axis Factoring
Rotation Method: Promax with Kaiser Normalization a a Rotation converged in 5 iterations
Extraction Method: Principal Axis Factoring
Rotation Method: Promax with Kaiser Normalization
Extraction Method: Principal Axis Factoring
Rotation Method: Promax with Kaiser Normalization
Enter a Dependent Variable: SUM_INT b All requested variables entered
Std Error of the Estimate
1 428 a 183 170 2.348 a Predictors: (Constant), SUM_CON, SUM_ECO, SUM_SEC, SUM_MAC
Model Sum of Squares df Mean Square F Sig
Total 1633.830 246 a Dependent Variable: SUM_INT