Gold Investment Returns Vary Widely Depending on Method

The price of gold in Korea has risen over the past month, but the actual return on investment varies greatly depending on the method of investment. According to a report from the Korea Exchange, assuming an initial investment of 10 million won in gold on January 31st and selling it on the same day, the KRX gold market recorded a profit of about 450,000 won (4.49 percent), while the gold exchange-traded fund (ETF) made around 410,000 won.

The report highlighted that the difference between taxes, transaction fees, and purchase and sale prices determines the return on investment. For example, buying gold in the KRX gold market comes with a 0.22% online transaction fee, which can eat into profits. Additionally, capital gains tax is not levied on gains from trading in the KRX gold market.

Gold ETFs, such as ACE KRX Gold Spot, also showed relatively high returns, increasing by 4.85% during the same period. However, dividend income tax of 15.4% is added to the profit, reducing the after-tax profit to around 410,000 won. The actual tax depends on the target base price at the time of sale and the trading fee of securities companies.

On the other hand, gold bars posted losses despite the rise in gold prices. When consumers bought pure gold (3.75 grams) on the Korea Gold Exchange, the initial purchase price was 826,000 won. If sold a month later at 726,000 won per gram, the final amount would be around 1.2 million won less than the investment principal.