"First Time Ever" Shock... Record-Breaking Investment Rush into 'Safe Haven Assets'

As we enter an era of uncertainty, investors' concerns are deepening. The USD/KRW exchange rate, which surged due to Donald Trump-initiated trade wars and geopolitical risks, remains unstable. Rekindling inflation concerns in the United States are also intensifying the interest rate cut dilemma for central banks worldwide.

As financial market volatility persists, investors' funds are ultimately flowing into 'safe-haven assets'. Investors struggling to find suitable investment opportunities are turning to alternative investments such as USD deposits and gold banking products. Experts advise that "with domestic and international challenges unlikely to resolve in the short term, it's time to diversify portfolios with safe-haven assets like USD and gold."

USD Deposits Reach Two-Year High

According to the financial sector on the 22nd, the total USD deposit balance at the five major commercial banks - KB, Shinhan, Hana, Woori, and NH - reached $65.66 billion (as of the 19th). This represents an increase of over $2.1 billion just this month. Based on month-end figures, this is the highest level since January 2023 ($68.23 billion).

The surge in USD deposits is attributed to the growing preference for safe-haven assets among investors. The USD is considered one of the primary safe-haven assets. This also reflects expectations that the strong dollar trend will continue for a considerable period. Amid sustained high exchange rates - the highest since the financial crisis - investors are rushing to buy dollars instead of selling for profits, anticipating further increases. The strategy combines increasing safe-haven asset allocation while maintaining a certain portion of assets in USD for foreign exchange gains.

Higher interest rates are another factor drawing investors to USD deposits. USD deposits offer higher rates based on the US federal funds rate (4.5%) compared to KRW deposits. They provide 0.5-1.0 percentage points higher rates than KRW deposits, which have fallen below 3% annually. Investment periods range from 1 day to 24 months. Like KRW deposits, they are subject to 15.4% interest income tax.

However, Private Bankers (PBs) advise carefully comparing the pros and cons of USD deposit products across banks before investing. KB Bank's 'KB TWO Tech Foreign Currency Time Deposit' is worth considering for investors focused on exchange rate gains. It automatically terminates the deposit and converts USD to KRW when the exchange rate reaches a preset level. Woori Bank's 'Exchange Rate CARE Foreign Currency Installment Deposit' allows adjusting purchase amounts based on exchange rate fluctuations. Shinhan Bank's 'SOL Travel Foreign Currency Deposit', linked with recently popular travel cards, is also gaining attention.

Traditional Safe Haven Gold Also Seeing Massive Demand

Not just USD, but gold - another representative safe-haven asset - is experiencing an 'investment rush'. The gold banking balance at KB, Shinhan, and Woori Bank, which offer gold banking products, reached 910.9 billion won (as of the 19th). This represents a 77% increase compared to the same period last year. This is the first time these banks' total gold banking balance has exceeded 900 billion won.

Physical gold bars are so popular they're hard to obtain. The five major banks' gold bar sales this month reached 58.1 billion won, more than double January's sales (27 billion won).

Gold prices are hitting 'record levels' as safety-seeking investors participate in the 'gold rush'. Gold futures on the New York Commodity Exchange (COMEX) maintain around $2,950 per ounce.

The likelihood of continued gold price increases makes gold investment promising. Goldman Sachs raised its year-end gold price forecast to $3,100 per ounce, up from last month's projection of $3,000.

The most attractive way to invest in gold is through the 'KRX Gold Market' operated by the Korea Exchange. Investors can trade gold through securities accounts in the KRX Gold Market. The main advantage is exemption from dividend and capital gains taxes. For investors seeking small, regular gold purchases, bank-operated gold banking is recommended.

Safe Haven Asset Popularity Expected to Continue Through First Half

Experts anticipate sustained buying pressure as preference for safe-haven assets spreads. "With high volatility in domestic and international stock markets, safe-haven assets' popularity is expected to continue through the first half of this year," said Choi Eun-kyung, PB at Hana Bank Seoap Gujeong Gold Club.

However, experts commonly advise focusing on building 'stable portfolios' rather than aggressively chasing safe-haven assets. Given that USD and gold prices have already risen significantly, they recommend investing up to 10% of the total investment portfolio in each. Nam Tae-kyo, PB at Hana Bank Lotte World Tower Gold Club, stated, "Portfolio diversification is more important than ever to prepare for unexpected uncertainties," adding, "Portfolios should be constructed conservatively with lower target returns, diversifying across USD, gold, and bonds."

Reporter Chang Hyun-joo