Bank of Korea Dives Back into Gold with $250M ETF Purchase
The Bank of Korea (BOK) has made its first gold-linked investment in 13 years by purchasing shares of SPDR Gold Shares, a physically backed gold exchange-traded fund. The BOK bought 679,765 shares worth about US$250 million at the end of the second quarter, according to a filing with the US Securities and Exchange Commission.
This move marks the central bank's first gold-linked purchase since 2013. Choi Kyuho, an economist at Hanwha Investment & Securities Co., stated that 'The Bank of Korea's allocation to gold is quite low.' He added that from a global standards perspective, there is room for the BOK to make additional gold purchases.
The BOK has sat out the recent buying spree by central banks globally, with physical gold holdings unchanged at about 104.4 tons since its last purchases in 2013. However, the bank announced earlier this month that it would establish a framework to buy gold refined in South Korea, aiming to diversify gold purchase sources and support a gradual increase in the metal's share of its foreign-exchange reserves.
Investments in ETFs provide the BOK with exposure to gold without expanding its physical bullion stockpile. This allows for greater liquidity and ease of trading compared to holding physical gold as a reserve asset.