Buyers must wait months to receive their physical silver, with some handed a 5-month waiting receipt, while sellers face agonizing days of frozen funds before receiving their cash.

Hoang Nam, an investor in Hanoi, purchased 5kg of silver during the market frenzy in January at an average price of VND100 million per kilogram. The subsequent continuous drop in international silver prices left him under prolonged stress. 

Having tracked global silver price movements for years, Nam noted that the domestic market usually reacts with a specific time lag compared to the world. On May 14, Nam decided to cut his losses, selling at a total loss of VND68.8 million, equivalent to a deficit of nearly VND 14 million per kilogram.

During the peak of the silver rush, Nam had to queue early just to buy silver and receive a waiting receipt. When selling, he also queued for nearly 2 hours. Notably, his ordeal continued as his money was "held hostage," taking about 6 days for the funds to hit his bank account. 

Nam stated he has no intention of continuing silver investment in the future. “I no longer have the psychological stamina to follow silver. Watching the prices swing drastically every day is simply too stressful,” he said.

Nga, another investor who just sold her silver to cut losses, also shared that she had to wait nearly a week for the money to be credited to her account after completing the transaction. 

“Selling silver and waiting 6 days for the money: they owe you even a few million dong,” she complained. 

Nga added that those who mistakenly bought silver from small private brands faced severe price manipulation when selling back. The buyback prices at some shops were significantly lower than the market rate, causing heavy losses for investors who needed urgent capital recovery.

A survey at several silver trading points showed a sharp surge in people selling silver. Many brought physical silver or previous order invoices to transact, queuing up for purity testing and paperwork. Processing times dragged out due to the sudden spike in sellers. At a trading hub on Tran Nhan Tong Street, customers buying silver at this moment still face a 5-month waiting note, while sellers must wait 6 days to receive their funds via bank transfer.

Silver investment carries high volatility risks

Tran Trong Duc, CEO of Virtus Prosperity, believes that silver investment is far riskier than gold. Silver functions as both a precious metal and a vital industrial raw material. This dual nature makes silver prices highly sensitive to economic cycles, triggering much sharper fluctuations than gold.

“When the market is euphoric, silver surges much faster than gold, but when it corrects, the crash is far more brutal,” Duc commented. 

During the silver booms of 1980 and 2011, prices plummeted by 75 percent to nearly 90 percent from their peaks. 

In the domestic market early this year, silver prices dove over 30 percent within a short period. Investors who bought at the peak of around VND123-124 million per kilogram in late January are now facing losses of nearly VND40 million per kilogram.

Furthermore, liquidity is considered far lower than gold. The silver market remains fragmented and heavily dependent on individual dealers. Investors are almost forced to sell back to the exact shop where they purchased. Additionally, the buy-sell spread for silver is significantly wider than gold, hovering around 3 percent, compared to just 1 percent for gold. This wider spread inflicts immediate losses on investors the moment a transaction is executed.

Another factor emphasized by Duc is that the silver market in Vietnam currently lacks a clear legal framework. While the gold market is regulated by Decree 24/2012/ND-CP with specific constraints, raw silver trading remains primitive, posing high risks regarding product quality and dealer credibility.

Regarding the 6-day payment delay for sellers, the CEO stated this is a clear sign of liquidity distress in the market. 

“When investors want to liquidate an asset but have to wait days for cash, their rights are clearly compromised,” Duc analyzed. 

The root cause stems from dealers struggling with capital rotation and inventory management amid wild market fluctuations. Lengthening the payment window is seen as a tactic for businesses to balance their cash flow. Thus, investors face a double disadvantage: hitting a wide buy-sell spread while losing opportunity costs as their capital remains locked for days.

Manh Ha