Gold Rush... 'Big Money' Flowing into Gold Investments

Gold Banking Balance Exceeds 900 Billion Won for the First Time

Large sums of money are flowing into gold investments as financial market volatility increases. This is to secure safe assets amid uncertainty.

According to the financial sector, the gold banking balance of KB, Shinhan, and Woori Banks, which handle gold banking products, was recorded at 910.9 billion won (as of the 19th). This is a 77% increase compared to the same period last year. This is the first time that the total gold banking balance of these banks has exceeded 900 billion won. Physical gold bars are so scarce that they're difficult to find for purchase. The gold bar sales of the five major banks—KB, Shinhan, Hana, Woori, and NH Bank—have reached 58.1 billion won this month. This is more than double the amount sold during the entire month of January (27 billion won).

As investors preferring safe assets join the 'gold rush' in large numbers, gold prices are soaring to 'record levels.' The possibility that the gold price uptrend may continue for the time being is another reason why investments are concentrated in gold. Goldman Sachs, a U.S. investment bank, has raised its year-end gold price forecast to $3,100 per troy ounce. This is another upward adjustment from last month's forecast of $3,000.

The most attractive method of gold investment is to utilize the 'KRX Gold Market' operated by the Korea Exchange. This involves opening an account with a securities firm and then buying and selling gold through the KRX Gold Market. The advantage is that investors can benefit from exemptions on dividend income tax and capital gains tax. For investors aiming to purchase gold through small installment investments, gold banking, which allows you to buy gold through a bank account, is recommended.

However, experts advise that gold investments should not exceed 20% of surplus assets. Park Tae-hyung, a private banker at Woori Bank's TCE Signature Center, said, "Gold is a safe asset with little correlation to other asset classes such as stocks, bonds, and oil," adding, "By including gold in your portfolio from a minimum of 5% to a maximum of 10%, you can maintain a stable return."

There are also opinions recommending a split purchase strategy, given the high volatility of gold prices. This means minimizing investment risk by dividing funds for purchases during gold price correction periods. Choi Hye-sook, a private banker at Hana Bank's Seoap Gujeong Gold Club, said, "If trade tensions are resolved faster than expected, gold prices could fall in a short period," adding, "Rather than investing all your money at once, I recommend splitting purchases into 2-3 times."

Park Jae-won, Reporter wonderful@hankyung.com