500 Billion Won Flows into 'SOL International Gold' in Just One Week

Published 21 Oct.2025 08:44(KST)

Recently, the domestic gold price has been exceeding the international gold price by more than 10%, a phenomenon known as the "Kimchi Premium." As a result, investment demand for exchange-traded funds (ETFs) that directly reflect international gold prices is increasing.

Shinhan Asset Management announced on the 21st that, over the past week, individual net purchases of the "SOL International Gold ETF" reached 54 billion won.

The "Kimchi Premium" refers to the situation where the domestic spot gold price (KRX) is significantly higher than the international spot gold price (London LBMA), which occurs during the process of converting the internationally traded dollar price into Korean won. Since last month, the intensifying trade conflict between the United States and China, along with rising geopolitical uncertainty, has led to a surge in gold purchases by domestic investors, driving the premium up to about 20% over the international price.

When the premium rapidly expands and then contracts, the domestic spot gold price fails to keep pace with the international price, creating a risk that investors who bought near the peak may incur short-term losses. As of last week, the premium on domestic spot gold prices has dropped by about 10 percentage points from its peak, now standing at 8.9%.

Park Sumin, Director of the ETF Product Strategy Team at Shinhan Asset Management, explained, "The factors driving the rise in gold prices include: a weaker dollar, expectations of interest rate cuts by the US Federal Reserve, geopolitical risks, and increased gold purchases by central banks as well as additional demand through ETFs."

He added, "While demand for domestic gold ETFs and spot gold is surging, it is not easy to secure actual supply, which leads to the premium. In addition, the domestic gold market has relatively underdeveloped futures and hedging instruments, so the quote structure is demand-driven, further expanding the premium."

The SOL International Gold ETF is the first product in the country to directly track international spot gold prices, reflecting global gold prices and remaining unaffected by domestic supply and demand factors such as the Kimchi Premium. Furthermore, since there is no need to roll over futures contracts, it avoids the rollover costs and the risk of reduced returns caused by a contango structure, where the price of longer-dated contracts is higher than that of near-term contracts. Its advantage lies in tracking international gold prices accurately and efficiently.

Director Park emphasized, "Gold remains a valid investment asset," and added, "In a phase where the upward trend is expected to continue, considering gold as a long-term investment vehicle-such as through a pension account-means that an ETF tracking international gold prices can be a more efficient and stable alternative."

Shinhan Asset Management plans to enhance the long-term investment efficiency of the SOL International Gold ETF by reducing the total annual fee from the current 0.3% to 0.05% at the end of this month.