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, reflecting its enduring value and significance As a noble metal, gold is renowned for its eternal shiny color that never oxidizes, maintaining its appearance over time Its exceptional malleability and ductility make it one of the most valuable materials, allowing for intricate craftsmanship and versatile applications Additionally, gold is a scarce resource, with an estimated 170,000 tonnes remaining in the Earth's crust, contributing to its status as a highly coveted and valuable asset.
Gold has been used as jewelry since 3000 B.C in the Middle East, highlighting its historical significance Approximately 1500 years later, the Shekel emerged as the first gold coin, serving as a standard for trading and exchanging goods in the region.
In 1091 B.C, gold was used as form of money in China, a big country of ancient Asia land
Since the beginning of 18 th century until the shutdown of Bretton Wood regime in 1970s, gold is used as international standard for conducting transactions and currency exchange around the world
Gold is widely recognized as "real money" on a global scale, unlike fiat currencies that rely heavily on the political stability and economic strength of their issuing countries to maintain their value.
Most central banks maintain a portion of gold in their foreign reserves to ensure financial stability and credibility As the world's largest economy, the United States also holds the largest gold stock in its treasury, highlighting the significance of gold as a secure asset for national reserves.
Figure 1: Top 30 countries/organization holding gold as reserve assets (tones)
Gold remains a highly valuable and irreplaceable asset due to its extensive use in industrial applications, religious practices, and as a symbol of wealth and power worldwide (Source: World Gold Council, 2015; Bernstein, 2000) Its intrinsic value stays consistently high, driven by its multifunctional significance Recent global financial market instability and increasing geopolitical tensions and war risks have contributed to a rising demand for gold in the international market.
Gold prices have steadily increased since the dot-com bubble burst in 2000, driven by economic uncertainties and crises Significant events like the 2008 global financial crisis and the 2010 Greek public debt crisis boosted gold’s appeal as a safe haven As a result, gold prices peaked at over $1,650, reflecting its status as a valuable asset during times of economic instability.
USD / ounce in the year 2012, then gold price decreases after the recovery of the US economy was confirmed
Figure 2: World gold demand in period 2000-2015
Figure 3: World gold price period 1970-2015
Gold is widely accepted as investment instrument, sometimes called “safe haven”
Investment in gold account for more than one-third of total demand for gold in global market
Gold has long been a preferred choice for international investors seeking to diversify their portfolios and hedge against global economic uncertainties (World Gold Council, 2015) Investment options in gold include both physical and non-physical methods; for instance, investors can directly purchase or sell gold bars through jewelry stores, banks, or financial service providers Alternatively, they can invest in gold exchange-traded funds (ETFs), which are publicly traded investment vehicles whose value is linked to the current market price of gold, offering a convenient and liquid way to gain exposure to gold investments.
Figure 4: Gold ETF holding in global market
1.1.2 Demand for gold in Vietnam
Gold has long been a primary traditional asset for wealth accumulation in Vietnam According to the World Gold Council (2015), Vietnam ranks as one of the largest gold-consuming countries, experiencing a significant growth in gold demand.
Figure 5: Gold demand in selected countries
Vietnamese culture, similar to other Asian nations, exhibits a high demand for gold due to its cultural significance Gold has historically played a vital role in traditional communities, symbolizing power and wealth Wealthier individuals often wear more gold or golden-colored accessories to showcase their social status Additionally, gold jewelry is an essential asset during important life events such as weddings and business inaugurations, reflecting prosperity and good fortune.
Figure 6: Vietnam gold demand period 2000-2015
Gold is a highly sought-after asset in Vietnam, serving as a long-term store of wealth due to its significant demand in the market The popularity of gold is reflected in the widespread presence of gold jewelry stores across the country Given its importance to the Vietnamese economy, gold trading alongside foreign currencies is strictly regulated to ensure economic stability Additionally, Vietnamese citizens are legally required to purchase gold bars through licensed institutions, emphasizing the government's control over gold transactions (Nhu & Trang, 2014).
Vietnam need capital for economic development, but many of capital are in the form of gold in households, estimating there are 400 to 1000 tones of gold kept in houses of
Vietnamese families (Thuy, 2013) The people use gold as hedging instrument against high inflation environment, which could cause impairment on their wealth The demand for gold in
Vietnam make the economy have trouble because the gold import contribute to the deficit trade balance through recent years.
Problem statement
The gold market plays a vital role in Vietnam’s economy by influencing key economic stakeholders The government seeks to boost national development by mobilizing gold held in households as a form of capital Banks aim to expand their deposit base through gold-related financial services offered to Vietnamese households Meanwhile, investors are keenly interested in understanding the causes of gold price volatility in Vietnam, which impacts investment strategies and market stability.
Numerous studies have examined the gold market in Vietnam, primarily focusing on empirical analysis of gold prices and macroeconomic factors influencing the market (Hoang, 2004; Hau et al., 2013; Sy).
There is a lack of micro-level research on the investment behaviors of Vietnamese households toward gold While some studies have been conducted in other countries (Maheran et al., 2008; Lutter, 2008; Hundal et al., 2013), cultural differences may limit their applicability to Vietnam This study aims to fill this research gap by exploring the factors that influence Vietnamese households’ intention 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, Vietnam's economic hub, offering unique insights into its diverse demographic structure, which includes residents from all over the country Additionally, HCMC's highly active gold market, characterized by easy access to numerous licensed institutions, provides a rich environment for research These factors make HCMC an ideal location for examining market dynamics and consumer behaviors related to gold trading in Vietnam.
This study is conducted by questionnaire survey method to explore in-dept understanding of factors affecting decision to invest in gold of individuals.
Significance of research
This research is the first to explore investment behaviors toward gold in Vietnam, providing valuable insights into local gold demand Gold plays a crucial role in the global financial system, with demand closely linked to worldwide economic growth Understanding the motivations behind gold purchases in developing countries like Vietnam can help forecast long-term gold demand The future prospects of gold investments depend on fundamental needs and economic factors affecting consumers globally.
This research plays a crucial role in Vietnam's policy-making process for regulating the gold market The high levels of gold imports negatively impact the country's trade balance and create pressure on exchange rate management Understanding the factors that drive Vietnamese people's love for gold is essential for controlling the gold market and mitigating its economic effects.
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 mental process, but simply defined, it involves spending money or capital to increase wealth (Ackert & Deaves, 2010) Most people believe that earning money solely through a job is the only way, leading to a cycle where increasing income requires overtime, sacrificing leisure time and personal enjoyment Since time cannot be multiplied, the alternative is to allocate property or assets to generate income passively By investing, your money works for you—earning continuously even while you sleep, relax, or spend time with friends—maximizing earning potential without needing higher wages, overtime, or switching to a higher-paying job.
Investment is a strategic process based on careful analysis, unlike gambling which involves betting on uncertain outcomes with the hope of quick gains Many people confuse investing with gambling due to some individuals engaging in reckless behaviors, such as buying shares based on rumors or tips without thorough financial evaluation For example, purchasing stock solely based on hearsay about company secrets resembles gambling in a casino, highlighting the importance of responsible investing practices Proper investing involves research and informed decision-making, ensuring long-term growth rather than speculative risk.
Expectation theory suggests that investors tend to focus more on offsetting potential losses than on maximizing profits When investments generate gains, investors prefer to realize profits immediately rather than reinvest for potential future growth Conversely, if investments are at risk of loss, they often hold onto their assets in hope that market conditions will improve, despite the increased risk In a positive market trend, investors typically buy assets and sell quickly as prices rise to secure short-term profits, operating under the belief that current asset prices fully reflect all available information.
The "adverse risk theory" explains investor behavior characterized by risk aversion, driven by the asymmetric psychology where the pain of losses outweighs the pleasure of gains Empirical evidence demonstrates that investors perceive losses as significantly more impactful than equivalent gains, leading them to hold onto losing assets in hopes of a price rebound This theory helps explain why investors often retain assets during declining markets, despite unfavorable price movements.
Mental accounting theory explains that investors often divide financial decisions into separate "virtual accounts" in their minds rather than viewing them as interconnected, leading to independent decision-making that overlooks account correlations This mental segmentation can cause investors to make seemingly rational choices that are actually flawed, as they fail to consider the real-world correlations among events that influence those decisions.
Psychological tests reveal that many individuals tend to believe they are better than others, leading to an overestimation of their understanding This overconfidence often results in increased investment activity, as investors become more willing to act on their own views while ignoring external input from others Overconfident investors usually perceive their actions as less risky compared to their counterparts, which can lead to reckless decision-making Additionally, they may misinterpret the information they receive, not only questioning its authenticity but also misunderstanding its true significance, further fueling their overconfidence in investment decisions.
The “conservative theory” also suggest the familiar explanation about investing process
When economic conditions change, people tend to react slowly, often anchoring their mindset to the previous economic situation They may assume that a temporary decline is just short-term, believing the long-term economy remains positive, which causes them to overlook early signals of a cyclical downturn Over time, when they fail to see improvements, panic sets in, prompting mass asset sell-offs This behavior leads to unexpected market fluctuations and increased volatility.
The "herd" effect has long influenced investor decision-making, regardless of their experience level This psychological tendency becomes particularly evident when investors face pressure to make quick decisions with limited information Under such circumstances, investors are more likely to conform to the group's opinions, believing that others cannot be wrong, which often leads them to alter their original judgments.
Intention is defined as an individual's perception of the likelihood to engage in a specific behavior, such as investing (Fishbein and Ajzen, 1975; Gopi and Ramayah, 2007) Investors’ intentions toward a particular financial instrument are heavily influenced by their attitudes regarding its perceived characteristics They are more inclined to invest when they possess the necessary time, skills to evaluate the investment, and sufficient funds When forming an investment intention, investors typically assess relevant factors related to the instrument, while their emotional perceptions of these evaluations play a role in justifying their decisions In this context, the intention to invest is considered a “will without force,” meaning that investment decisions are made freely, without external pressure.
Gold investment typically involves physical assets like gold bars and other forms suitable for public investment, such as “smooth rings” and gold certificates While numerous studies focus on gold price fluctuations and macroeconomic factors, there is limited research on investor behaviors and motivations toward gold investments Although some international studies, such as Maheran (2008), examine public acceptance of gold coins, the investment aspects of this vehicle remain underexplored Addressing this gap can provide valuable insights into the factors influencing gold investment decisions.
Factors affect intention to invest in gold
The geopolitical tensions between a home country and other nations often drive investors to seek gold as a safe asset due to its universal acceptance Recently, disputes in the East Sea (also known as the South China Sea) between Vietnam and China have caused increased volatility in the gold market In response, the State Bank has taken measures to stabilize market sentiment and maintain economic stability.
In Vietnam, frequent news about gold in daily newspapers continually motivates small investors to speculate on gold, highlighting the media's powerful role in raising awareness about investment opportunities (Phu, 2010; Karrh et al., 2003) However, some potential investors remain unaware of alternative investment options due to limited information available through media channels, which can hinder informed decision-making.
Gold investment is widely regarded as an effective diversification tool to reduce overall portfolio risk due to its low correlation with other asset classes (Baur and Lucey, 2010) In Vietnam, individuals typically invest through four main channels: real estate, gold, stocks, and savings deposits (Vy, 2014) Consequently, gold serves as a valuable investment vehicle for diversifying investment portfolios and enhancing financial stability.
Investing in gold offers high long-term returns, making it an attractive option for investors seeking growth As a non-renewable commodity that lasts forever, gold is often stored securely rather than circulated, which limits its supply relative to increasing global demand driven by population growth While gold prices tend to experience short-term volatility, long-term investments—typically over a six-month period—generally yield more favorable returns compared to other assets (Ronapat, 2007)
Gold investment currently benefits from a favorable tax treatment, as there are no taxes incurred when selling gold assets This makes gold a more attractive investment compared to stocks and real estate, which are subject to income taxes on trading profits The lack of tax on gold sales provides investors with a significant advantage, enhancing the overall profitability of gold as a secure and tax-efficient investment option.
Macroeconomic news and gold prices are universally recognized to be strongly correlated on a global scale Numerous studies, including Roache and Marco (2009), provide evidence that gold prices are highly sensitive to macroeconomic indicators, highlighting the close relationship between economic news and gold market movements.
Several key macroeconomic indicators significantly influence investor decisions, yet few are widely known to the public According to Ruta and Anjali (2014), the five most impactful economic indicators are the price index, gross domestic product (GDP) growth, exchange rate, foreign investment, and money supply These metrics play a crucial role in shaping market trends and investment strategies, highlighting their importance for understanding economic health and investment opportunities.
Gold plays a crucial role as an inflation hedge, especially in Vietnam where gold prices are strongly correlated with the national price index, making gold an effective tool for inflation protection (Cuc and Reza, 2013) Investors often turn to gold during periods of disinflation, believing that gold offers higher returns compared to other assets, and its physical characteristics enhance its effectiveness as a hedge—surpassing traditional financial assets like stocks and bonds (Worthington and Pahlavani, 2007; Lutter, 2008).
In recent years, the VND/USD exchange rate has steadily depreciated, reducing the attractiveness of the Vietnamese dong as a savings instrument for households Due to restrictions on purchasing foreign currency for investment purposes, Vietnamese investors often turn to alternative assets, such as gold, to hedge against the declining value of their domestic currency This trend highlights the growing reliance on gold as a safe haven in response to currency depreciation and monetary instability.
Foreign investment plays a crucial role in boosting a country's economic performance, which helps stabilize gold prices by fostering confidence in economic development Additionally, foreign investment influences gold prices through the exchange rate channel; increased investment leads to greater foreign currency reserves, impacting currency valuation and subsequently affecting gold prices.
Changes in the money supply significantly impact inflation and exchange rates, which are closely linked to gold prices When governments increase the money supply, it often signals ineffective monetary policy, leading to negative public reactions Such actions can trigger a series of adverse consequences, including rising inflation and currency depreciation, ultimately influencing gold prices as a safe-haven asset Understanding the relationship between money supply dynamics and gold market movements is essential for investors and policymakers alike.
In the gold market, there is a traditional wisdom “the rising insecurity is good for gold”
The concepts of insecurity and security are complex and challenging to define clearly in simple terms According to Friedewald et al (2014), there are seven distinct perspectives of security that people experience, highlighting the multifaceted nature of these issues.
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 implementing measures to protect against exceptional and rare threats that are not intentionally caused by external or internal agents These threats, while spontaneous, have the potential to severely impact quality of life Effective security strategies in this context aim to address unpredictable dangers and ensure public safety despite unforeseen and uncommon risks.
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 that are more popular and preferable, even if they are not always the most profitable, are primarily favored due to their convenience Investors prioritize ease of access and simplicity when choosing where to allocate their funds, making convenient investment instruments more attractive regardless of immediate profitability This preference underscores the importance of user-friendly features and hassle-free processes in investment decisions, highlighting why convenience often outweighs potential returns.
According to Chang & Polonsky (2012) “convenience is the ability to reduce consumers’ non- monetary costs (i.e., time, energy and effort) when purchasing or using goods and services
These are five types of convenience:
Decision convenience is crucial when consumers are choosing how to access a service, especially given the abundance of providers and delivery options available Consumers tend to prefer options with fewer choices, as this reduces decision-making effort and perceived opportunity costs For instance, gold is often considered an optimal investment choice because it offers simplicity and fewer options compared to investments like real estate or stocks, which present a wider array of choices.
Method and Data
Theorical model
Based on aboved dicussion (section 2.2) , the model is contructed as follows:
Hypothesis
According to the literature review discussed in section 2.2, previous studies support the author's perspective that all four factors in the research model positively influence the dependent variable The research hypotheses are grounded in this evidence, emphasizing the significant impact of each factor on the overall outcome These findings highlight the importance of considering multiple variables to understand their combined effect on the dependent variable, reinforcing the validity of the proposed research framework.
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 explore the factors influencing individuals’ investment intentions in gold and to validate the reliability of theoretical constructs in survey practices Interviews were conducted in a comfortable setting to facilitate open discussions about gold investment, involving ten participants—five of whom intend to buy gold for investment purposes and five who currently hold gold as a part of their wealth portfolio.
The interview began with an introduction to the organization and a clear explanation of the research purpose, designed to help respondents easily understand their role Information was presented thoughtfully to positively influence respondents' perspectives Prior to conducting the interview, participants were reassured that all their answers would be kept confidential, ensuring their comfort and encouraging honest responses.
Initial interview questions typically include general expressions like "Glad to meet you, how are you today?" or "Your dress is fashionable, where did you buy it?" which help encourage open dialogue and elicit the interviewee’s opinions These questions allow respondents to expand on their answers and share their thoughts freely To maintain objectivity, the interviewer refrained from revealing personal opinions on the discussed topics The interview also employed specific, structured questions such as "Can you tell me about gold in Vietnam?", "Why do you choose gold as an investment?", and "What do people think and feel about purchasing gold?" to gather targeted insights.
After conducting in-depth interviews with respondents, a sample questionnaire was developed to ensure clarity and understanding of the questions The questionnaire was carefully organized to promote consistent comprehension across most respondents Additionally, by including a polite cover letter, the survey aimed to create a more respectful and comfortable experience for participants, enhancing overall response quality.
The ambiguous and confusing language in the questionnaire has been revised to ensure clarity and ease of understanding for interviewees The finalized measurement items are now clearly defined and straightforward, enhancing the overall reliability of responses Detailed information about the questionnaire is provided in 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
3 The Vietnamese currency exchange rate with USD will MAC3 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
2 I would consider investing in gold in next three month INT2
3 I want to invest in gold in the next three month INT3
Sample
This study follows Hundal’s (2013) recommendation of at least five interviewees per item, targeting 28 valid variables and involving a minimum of 140 individuals in Ho Chi Minh City (HCMC) HCMC offers two key advantages: its diverse demographic structure, representing people from all over the country, and an active, easily accessible gold market with numerous licensed institutions The research employs a questionnaire survey method to gain an in-depth understanding of the factors influencing individuals’ gold investment decisions A total of 300 questionnaires were distributed, with 247 valid responses collected, reflecting an 82.3% response rate through convenience 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.
Data Analysis and Results
Data reliability test with Cronbach’s Alpha
The reliability of the scale was evaluated using internal consistency measures, specifically Cronbach's alpha coefficient Prior to conducting exploratory factor analysis (EFA), Cronbach's alpha was employed to assess the scale's reliability and to identify and eliminate inappropriate variables that could generate dummy elements, thereby ensuring the accuracy and coherence of the measurement tool.
Cronbach's coefficient alpha indicates whether a measure is internally consistent, but it does not identify which specific variables should be retained To improve the measurement model, calculating the correlation coefficients between variables can help identify and eliminate those that do not contribute to accurately describing the underlying concept This approach enhances the validity and reliability of the research instrument by focusing on relevant variables.
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 and reliable measurement scale, while values between 0.7 and 0.8 are considered acceptable for research purposes A threshold of 0.6 or higher can be used when introducing new concepts or in innovative research contexts, according to Nunally (1978) and Peterson (1994), ensuring the instrument's adequacy in capturing the intended constructs.
- 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 show the results of Cronbach’s alpha of each construct In all scales, the alpha values are larger 0.8, range from 0.854 (Perceived Insecurity) to 0.936 (Perceived Economic
Benefits) indicating that the constructs are reliable and suitable 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 employed to uncover the underlying factor structure of observed data without preconceived assumptions Cronbach’s alpha analysis confirms that the data is suitable for EFA, ensuring reliable results By applying EFA, this study evaluates the consistency of the identified factor structures The research utilizes principal axis factoring with rotation to enhance the clarity and interpretability of the factors.
Before conducting exploratory factor analysis (EFA), it is essential to assess the adequacy of the data The KMO measure and Bartlett’s test are used for this purpose; in our analysis, the KMO value and a p-value of less than 0.001 from Bartlett’s test confirm that the data are suitable for factor discovery.
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
In this study, EFA was conducted using principal axis factoring with promax rotation The results, presented in Table 3, indicate that five factors explain a cumulative variance of 63.68% The individual factors account for 18.54% and 15.50% of the variance, respectively, highlighting their significant contributions to the data structure.
12.154% (third factor), 11.86% (fourth factor) and 5.64% (last factors) All the factor loading of each factor is larger than 0.5, so the EFA results is accepted
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 analyzes the impact of four key factors—Economic Benefits, Macroeconomic Concerns, Perceived Insecurity, and Convenience—on Investment Intention using an Ordinary Least Squares (OLS) regression The variables incorporated into the model are aggregated from their respective component items to enhance measurement accuracy Prior to conducting the regression analysis, Table 4 confirms that the independent variables are free from multicollinearity, ensuring the reliability 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 Concerns, Perceived Insecurity, and Convenience—collectively explain 17% of the variance in Investment Intention, demonstrating the model's explanatory power The model's adequacy is supported by a significant F-value of 14.095, confirming its overall statistical significance.
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 highest macroeconomic concern, with a beta value of 0.344, significantly influences the overall analysis, followed by economic benefits at 0.203, while perceived insecurity has a moderate impact at 0.116 Convenience exhibits the lowest effect, with a beta of 0.083 Most of these beta values are statistically significant at the 1% and 5% levels, indicating strong relationships, except for one variable that does not reach significance.
“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
Based on data from 247 working individuals aged 20-50 living in HCMC, the research reveals significant findings "Macroeconomic Concern" has the strongest influence with a beta of 0.345, indicating that people are motivated to invest in gold driven by their concerns about the overall economy This reaction to macroeconomic news aligns with previous studies (Dooley et al., 1995; Rohan et al.), highlighting the impact of economic perceptions on gold investment behaviors.
Recently, the Vietnamese government has adopted a "prudent macro policy" in response to global market volatility, recognizing the country's sensitivity to negative news This approach aims to stabilize the economy amid increased speculation in foreign currency and gold markets Research confirms that Vietnam's gold market is particularly vulnerable to international market fluctuations, emphasizing the need for cautious economic strategies.
Investing in gold offers notable economic benefits, particularly in developing countries facing high inflation risks, making gold an attractive investment asset Many investors perceive gold as a reliable means of potential profit, fueling their motivation to invest in it This positive perception of gold’s profitability has been confirmed by research and is consistent across various markets, as highlighted by Nik Maheran (2011).
“The rising insecurity is good for gold?” This research has answer this popular question
Individuals tend to invest more in gold when they feel uncertain about their safety, as increased insecurity enhances their motivation to seek safe assets This study is the first to explore the link between perceptions of insecurity and the intention to invest in gold; however, people might also prefer other secure investments like bonds or foreign reserve currencies if these options are accessible In Vietnam, the absence of an official foreign currency market for individuals, coupled with a still-developing and illiquid bond market, limits investment alternatives, making gold a preferred choice during times of rising societal insecurity.
Our research revealed that "Convenience" does not significantly influence the "Intention to Invest" in gold among Vietnamese consumers This suggests that, unlike typical goods and services, gold buyers in Vietnam place less importance on convenience during their purchasing process Gold is considered a special asset, and the usual emphasis on convenience is less relevant for this type of transaction Therefore, efforts to enhance customer comfort and ease may have limited impact on investors' decisions to purchase gold.
Conclusion
Conclusion
Gold has long been a key traditional asset for wealth accumulation in Vietnam, driven by deep-rooted cultural values shared across many Asian countries The high demand for gold in Vietnam is fueled by its cultural significance and status as a trusted store of value Despite the country's need for capital to support economic growth, a significant portion of wealth remains stored in household gold reserves, with hundreds of tons of gold kept in Vietnamese homes.
Vietnamese families often use gold as a hedging instrument against high inflation, protecting their wealth during economic instability However, the increasing demand for gold in Vietnam has challenged the economy, as gold imports have contributed to a persistent trade deficit in recent years This surge in gold purchases reflects the population's desire to safeguard their assets, but it also poses economic challenges by affecting the country's trade balance.
It is clear that gold market play a very important role in Vietnam economic situation
While numerous studies have explored the gold market in Vietnam, most focus on empirical analysis of gold prices and macroeconomic factors However, there is a significant research gap in understanding the specific factors influencing Vietnamese households' investment decisions in gold This study aims to address that gap by examining the key determinants that impact households’ choices to invest in gold, providing valuable insights for investors and policymakers alike.
This study focuses on Ho Chi Minh City (HCMC), Vietnam's economic hub, offering a unique advantage due to its diverse demographic makeup, with residents from across the country Additionally, HCMC's vibrant and accessible gold market, characterized by numerous licensed institutions, provides ideal conditions for thorough research and analysis.
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 aims to investigate how four key factors—Economic Benefits, Macroeconomic Concern, Perceived Insecurity, and Convenience—affect the intention to invest in gold The findings reveal that Economic Benefits, Macroeconomic Concern, and Perceived Insecurity significantly influence investors' intention to allocate funds to gold, highlighting their critical role in shaping investment decisions.
Gold investing in Vietnam offers significant economic benefits, including its global acceptance as a safe asset and its status as the most liquid asset within social culture It provides a diversified solution for wealth preservation and tends to deliver high long-term returns due to its scarcity Additionally, gold trading offers tax advantages, making it an attractive investment option Research indicates that these factors play a crucial, albeit secondary, role in influencing investors' intention to choose gold, with a standardized effect coefficient of 0.203.
Macroeconomic concerns reflect public perceptions regarding key economic indicators such as the price index, GDP growth, exchange rates, foreign investment, and the money supply This research highlights that macroeconomic factors play a first-order, significant role in shaping economic stability and policy decisions Understanding these concerns is essential for analyzing overall economic health and addressing potential financial risks.
(with standardized coefficient of effect is 0.344) in explaining intention to choose gold as investment
Perceived insecurity, encompassing concerns about physical states, political issues, socio-economic challenges, cultural changes, environmental factors, radical uncertainty, and information security, significantly influences investment decisions Research indicates that this perception plays a third-order important role, with a standardized effect coefficient of 0.16, in shaping individuals’ intention to choose gold as their investment option.
Convenience to invest encompasses perceptions related to decision-making, access, transactions, benefits, and post-benefit services in gold investing However, research indicates that convenience has an insignificant impact on the intention to invest in gold among Vietnamese consumers This is because Vietnamese people tend to pay less attention to convenience when purchasing gold, as they consider gold a special, culturally significant asset, and thus, providing more comfortable services for gold buyers appears less valuable.
Implications
This research is valuable for three group: the government, the banks and the investors
The government aims to boost economic development by increasing capital, which is currently stored as gold among the population Understanding the key factors that motivate people to hold gold is essential for formulating effective strategies Addressing these driving factors can help facilitate a shift from gold reserves to more productive investments, supporting sustainable growth.
Based on research result, government should pay attention on some economic benefits when issue policy to restrict the gold demand in Vietnam such as tax as a suggestion In
In Vietnam, gold trading is not subject to income tax, allowing many individuals to earn daily profits without paying taxes, unlike other investments such as stocks or real estate The stability of the economy plays a crucial role in regulating the gold market, as economic uncertainties often lead people to view gold as a safe haven for wealth preservation Additionally, perceptions of personal security influence gold investment trends; improving living security can help reduce the strong emotional attachment to gold as an investment vehicle.
Banks aim to increase deposit funds by offering gold-related financial services to Vietnamese households, recognizing that understanding clients’ intentions toward gold enhances the likelihood of successful service delivery Investors are keen to analyze the factors driving gold price volatility in Vietnam to make informed decisions Additionally, gaining insights into the behaviors of others can help optimize profitability in the gold market.
Research limitation
The primary limitation of this study is the small sample size, which was constrained by limited resources and time, preventing comprehensive coverage of all regions in Vietnam To enhance the representativeness and reliability of future research, larger datasets encompassing all provinces in Vietnam are necessary Expanding the sample scope will help confirm the consistency and validity of these findings across the entire country.
Future research should explore the impact of gold price volatility on consumers' purchasing intentions The fluctuations in gold prices, whether upward or downward, can influence individual decision-making differently, highlighting the need for adaptive strategies Understanding how both rising and falling gold prices affect buying behavior is essential for developing effective marketing and investment approaches tailored to specific market conditions.
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I am currently conducting research at the International School of Business (ISB) for my master's thesis on the factors influencing individuals' intention to invest in gold Your participation by completing this questionnaire would be highly appreciated and will contribute valuable insights to this study Please note that there are no right or wrong answers; feel free to respond honestly based on your feelings and experiences.
- 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
II Main content 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 month
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
INT2 I would consider investing in gold in next three month Scale
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
SUM_ECO, SUM_SEC, SUM_MAC b
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 b Predictors: (Constant), SUM_CON, SUM_ECO, SUM_SEC, SUM_MAC