"Buy When Cheap"... 'Gold Rush' Flocking to Bank Gold Accounts

Gold Banking Cumulative Volume Up 11.4% by March 9 Compared to December Last Year

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] As gold prices decline, the number of customers seeking gold-related products is increasing. This is interpreted as a surge in popularity for gold, a representative safe-haven asset, due to heightened stock market volatility and concerns over rising interest rates. Additionally, the affordability of gold is making it popular as an investment option.

According to the banking sector on the 15th, as of the 9th, the cumulative sales weight of Gold Banking (gold accounts) handled by KB Kookmin, Shinhan, and Woori Banks reached 10,036 kg. This is an 11.4% sharp increase from 9,010 kg in December last year. The popularity of gold accounts, which had been steady since the beginning of this year, has soared even higher this month. The cumulative sales weight increased by 228 kg from 9,587 kg in January to 9,815 kg in February, but in March, it rose by 221 kg over 6 business days as of the 9th, nearly matching the total cumulative amount of the previous month.

Gold accounts are gaining attention as a representative indirect gold investment product that allows easy investment. When a deposit is made into one's account, the balance automatically fluctuates according to the international gold price. However, banks do not directly purchase gold with customers' deposits. Instead, the same amount is deposited in dollars into gold account accounts opened by foreign banks. Investors deposit Korean won, but the balance changes linked to international gold prices and exchange rates.

The saving methods include 'free installment savings,' similar to regular savings, and 'fixed installment savings,' where deposits are made on predetermined dates. It has the advantage of allowing small-scale gold investment and the ability to redeem at any time. Transaction fees are also around 2%, cheaper than buying gold bars. Because of this, despite transaction fees and a 15.4% dividend income tax, it remains popular. However, gold accounts require caution regarding exchange losses (losses due to exchange rate fluctuations) as the conversion process applies international gold prices and dollar exchange rates.

Gold Bars Also Gaining Popularity... Demand Surges for Inflation Hedge

Customers are also flocking to gold bars favored by wealthy investors. KB Kookmin, Hana, and Woori Banks, which handle gold bars, sold 60.6 kg just in this month up to the 9th. This surpasses the sales record of 51 kg in December last year and is more than half of the sales volume in February (117.1 kg) and January (101.7 kg).

A banking sector official explained, "Recently, as risky assets have generally declined, demand for safe assets has increased," adding, "Concerns about inflation are also growing, so demand for gold as a hedge remains steady."

The price decline of gold, a safe asset, also reflects the mentality of 'buy when cheap.' On the 8th, gold traded on the New York Commodity Exchange fell 1.19% (20.30 dollars) from the previous day to 1,677.70 dollars per troy ounce. This is a 14% drop from 1,952.70 dollars per troy ounce at the beginning of the year. Compared to the surge to 2,051.7 dollars in August last year, the decline reaches 20%.

The decline in gold prices is also evident in the decrease of the cumulative balance of gold accounts. The cumulative balance of gold accounts, which recorded 596.6 billion won in December last year, was 632.7 billion won in January, 621.9 billion won in February, and 618.9 billion won as of the 9th. Although the cumulative sales weight increased, the cumulative balance decreased due to the drop in gold prices.

This content was produced with the assistance of AI translation services.