The Foreign Reserves Management Group of the Bank of Korea (BOK) is reviewing a plan to invest in gold spot exchange-traded funds (ETFs) listed overseas.
On the 28th, a Bank of Korea (BOK) Foreign Reserves Management Group official told ChosunBiz by phone, "We are looking into the possibility of investing in gold spot ETFs," adding, "It is part of our routine review of investment destinations in the process of managing foreign-currency assets." The official added, "Nothing has been decided."
So far, the Bank of Korea (BOK) has maintained a cautious stance on gold-related products while building its foreign-currency asset portfolio around advanced-economy stocks and bonds. The rationale is that gold provides no cash flow such as interest or dividends and has relatively lower liquidity and marketability, reducing operational efficiency.
However, as international gold prices have strengthened recently, the environment surrounding gold is changing. After repeatedly setting a record high last year, international gold prices have continued to climb, recently surpassing $5,200 per troy ounce.
The Bank of Korea (BOK) appears to be reviewing investments in gold spot ETFs amid this trend. Gold spot ETFs track the price of physical gold and can be traded immediately in the market, making them a more marketable alternative to direct investment in gold.
If investment in gold spot ETFs materializes, the Bank of Korea (BOK) would purchase a gold-related financial product for the first time in 13 years. The Bank of Korea (BOK) bought 20 tons of gold in 2013, but halted additional purchases after a controversy over "gold investment losses" arose due to a decline in gold prices. Since then, it has not made additional gold purchases.