[Real Asset Strategies] Gold and Silver Hit Record Highs... Diverse Investment Options Beyond Physical Assets

Yonhap News Agency

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Gold, widely regarded as a representative safe-haven asset, has continued to set new all-time highs this year, drawing attention as an investment product. Not only gold but also silver is gaining the spotlight, with silver posting a higher rate of increase than gold and attracting market interest. The growing demand for safe assets is attributed to increased volatility in the stock market amid expectations of interest rate cuts by the US Federal Reserve (Fed). In the case of silver, additional industrial demand is also seen as a driving force behind its price surge.

According to the New York Mercantile Exchange on October 1, the December gold futures price closed at $3,855.2 per ounce (about 5.37 million won) as of September 30 (local time). Spot gold also hit an all-time high of $3,833.37 per ounce during intraday trading. As a result, both gold futures and spot prices reached record highs. Over the past year, gold has surged by as much as 50%. The domestic market price has also shown a steady upward trend. According to Korea Gold Exchange, the price of 1 don (3.75g) of gold stood at 759,000 won as of September 29, up about 52% year-on-year.

Recently, silver has also been drawing attention as an investment destination, recording a higher rate of increase than gold. On the same day, the international price of silver on the New York Mercantile Exchange was $47.02 per ounce. In the domestic market, the price of 1 don of silver surpassed 10,000 won, reaching 10,090 won. Silver prices have hit their highest level in 14 years since 2011.

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The rise in gold prices appears to be driven by increased preference for safe-haven assets due to US benchmark interest rate cuts, as well as the expansion of gold holdings by global central banks. Ongoing uncertainty surrounding the Trump administration's tariff policies has sustained demand for gold as a safe asset, while the Fed's resumption of rate cuts last week is seen as further accelerating the upward trend in gold prices. The expansion of gold purchases by major central banks is also cited as a factor pushing gold prices higher. According to Shinhan Investment & Securities, the annual net increase in gold holdings by central banks, which averaged 130 tons from 2015 to 2019, has nearly doubled to an average of 260 tons annually from 2022 through the first half of 2025.

While silver prices typically move in tandem with gold, recent increases in industrial demand have caused silver to outpace gold's rate of increase. Unlike gold, more than half of silver demand is for industrial use, and silver is essential in sectors such as green energy, electric vehicles, and artificial intelligence (AI), leading to consistently rising demand. According to Hana Institute of Finance, industrial demand for silver has increased by nearly 40% over the past decade.

Experts predict that gold and silver prices will continue to rise in the future. Ha Geonhyeong, a researcher at Shinhan Investment & Securities, stated, "As long as central bank buying and demand for hedging financial and fiscal policy risks persist, gold prices will remain on an upward trajectory," adding, "By the end of this year, gold prices are expected to approach $4,000." Hwang Seonkyung, a researcher at Hana Institute of Finance, commented, "Silver is perceived as an undervalued safe asset compared to gold, and the Russian central bank is moving to officially designate silver as a strategic asset," predicting, "Technological advancements and the ongoing transition to green energy will further accelerate future demand for silver."

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With gold prices soaring since last year, a variety of investment methods have attracted attention. The most common method is to buy and sell physical gold or silver bars. While capital gains are tax-exempt, buyers must pay 10% value-added tax (VAT), a 5% transaction fee, and a processing fee of around 2%. In addition, to prevent purchases of gold for illicit purposes such as money laundering, cash purchases are restricted. In the past, buying gold required visiting jewelry stores, but now gold bars can also be purchased through home shopping channels and banks.

Another way to buy physical gold is through the Korea Exchange gold market, the only domestic spot gold trading market. Investors can open an account with a member securities firm and trade gold like stocks. The trading unit starts at 1 gram, and transactions are conducted at market prices with no tax on capital gains. However, physical withdrawals are only possible in 1 kg units, and 10% VAT is charged on the transaction price.

Gold savings accounts (gold banking), which allow investment with relatively small amounts, are also a popular gold investment method. These accounts allow flexible deposits and withdrawals without taking physical delivery, with a minimum trading unit of 0.01 grams. A 15.4% withholding tax is imposed on capital gains, and the income is subject to comprehensive financial income taxation. However, deposits are not protected by deposit insurance. When closing a gold savings account, investors can receive cash for account transactions or physical gold for physical transactions. Physical withdrawals incur fees and VAT. A similar product exists for silver (silver banking), but it is less common than gold and, among commercial banks, only Shinhan Bank offers 'Silver Issue.' As with gold, a 15.4% dividend income tax is levied on capital gains, and the transaction fee is around 1%.

For those who own physical gold but are unsure how to invest, there are products that pay interest simply for depositing gold. In August, Hana Bank became the first in the financial sector to launch 'Hana Gold Trust,' a product in which customers deposit their gold with Hana Bank, receive an appraisal, and at maturity, receive both the physical gold and an operating profit equal to 1.5% of the appraised value. The operating profit is paid in cash, but can also be received in gold if desired. The minimum deposit is 30 grams. The trust fee is 0.3% of the appraised value, and a 22% (including local tax) miscellaneous income tax is applied to trust earnings.

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