News Header


South Korea Purchases Gold

Release Date: 
Wednesday, December 5, 2012

The price of gold moved modestly higher as the dollar fell.  Gold was $.80 higher at 6:41 a.m. Pacific Time on the New York Spot Market, trading at $1,698.60 per ounce.  Spot silver was $0.04 higher at $33.05 per ounce.  (Click here for the most current spot prices.)

South Korea's central bank purchased 14 tons of gold in November, its fourth purchase in the last year and one-half. The Bank of Korea now holds 84.4 tons of gold, up nearly six-fold from June, 2011.  

South Korea’s purchase “points to stronger support for gold prices from central banks," said Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS, the precious metals consultancy. "If private sector investment falters and prices dip, central banks' buying supports prices at higher levels than if this demand were not present. It is a substantial additional source of demand for gold bullion."

"Gold is a physical, safe asset and allows (the country) to deal with changes in the international financial environment more effectively," South Korea’s central bank said in a statement.

"By its own account, the Korean central bank regards gold as a safe asset and as a means of diversification in a bid to reduce the risks of foreign-exchange reserves management," Commerzbank said.  "Since gold accounts for just 1.2 percent of its currency reserves, the Bank of Korea can also be expected to buy more gold in future."  Commerzbank added that it remains optimistic on gold despite a recent pullback.

Central banks around the world bought a total of 351.8 tons of gold in the first nine months of 2013, up 2 percent from a year earlier, data from the World Gold Council showed.

The fiscal cliff remained in focus for analysts and markets. "If the U.S. really falls off the 'fiscal cliff', we are likely to see some buying of gold for store of value and also on the outlook that the U.S. dollar may depreciate further," said Lynette Tan, senior investment analyst at Phillip Futures in Singapore. "This is likely to give some support to gold."

(Sources:  “UPDATE 1-South Korea central bank bought 14 tonnes of gold in Nov,” Reuters, December 5, 2012; “PRECIOUS-Gold bounces from 1-month low, US budget talks drag,” Reuters, December 5, 2012; “PRECIOUS-Gold climbs above $1,700/oz as stocks rise,” Reuters, December 5, 2012; “Korea Raises Gold Reserves Third Time Since June Last Year,” Bloomberg, August 2, 2012)

News Footer


†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.