Bank of Korea resumes gold buying after 13-year pause

Bank of Korea resumes gold buying after 13 years, adding ETFs and a domestic channel to lift gold's share of reserves from 3.5 percent.

The Bank of Korea resumed gold purchases for the first time since February 2013, adding exchange-traded funds and a domestic procurement channel as it seeks to lift gold's share of foreign exchange reserves from 3.5 percent.

"With geopolitical risks becoming a persistent feature of the global environment, interest in gold as a safe-haven asset has grown significantly among central banks," Jung Hee-sub, head of the Bank of Korea's Reserve Management Group, said. "We also took into account the need to increase our gold holdings, which remain relatively low compared with those of other countries."

The BOK's 104.4 tons of gold rank 40th globally by tonnage but 98th of 100 countries by share of reserves, above only Chile and Colombia. The U.S. holds 8,133.5 tons, Germany 3,349.5 tons, and China 2,331.5 tons. The BOK bought 90 tons between 2011 and 2013 under former Governor Kim Joong-soo, then halted purchases after prices plunged and lawmakers attacked the decision in a November 2013 National Assembly audit. Gold has since climbed about 150 percent from the $1,627 per troy ounce level when purchases stopped, to $4,050 on Aug. 3, after peaking at $5,020 in February.

The shift aligns with a global move by central banks to reduce reliance on dollar assets. Poland bought 255.2 tons of gold from 2024 through July 2026, China 96.1 tons, and India 76.9 tons. A World Gold Council survey of 74 central banks found 45 percent plan to increase gold reserves within a year, and 60 expect growth over five years.

The BOK's new domestic channel targets 4-5 tons annually of export-bound gold from LS MnM and Korea Zinc, Korea's two main producers, which together refine 40-45 tons a year as a byproduct of copper and zinc smelting. Purchases will use negotiated block trades on the Korea Exchange's gold market, with the Korea Securities Depository handling settlement and custody. The government is backing the move with a value-added tax exemption on gold the BOK withdraws from the depository, effective Jan. 1, 2027.

Political History Explains the 13-Year Gap

Kim Joong-soo, governor from 2011 to 2013, bought 90 tons of gold — nearly 90 percent of current holdings — but drew sharp criticism when prices fell. Democratic Party lawmaker Kim Hyeon-mi said during a November 2013 audit that the BOK "failed to predict gold prices and caused national losses." A former senior BOK official said the political pressure was so severe that the central bank shifted allocations to U.S. stocks instead, which yielded acceptable returns, but that recent geopolitical instability and other central banks' actions eroded the case for further delay.

The BOK's gold is valued at $4.79 billion at average purchase prices but would be worth about $12 billion at current market prices, implying a compounded annual return of roughly 8 percent since 2013. All of its gold is stored at the Bank of England; the new domestic channel allows storage diversification.

Global Central Banks Accelerate Gold Accumulation

The BOK's move follows a broader trend of reserve managers diversifying away from U.S. Treasuries as financial sanctions and geopolitical tensions rise. The World Gold Council's survey found 60 of 74 central banks expect gold holdings to grow over five years. The BOK has not disclosed a target for its gold holdings. "We will take a gradual, long-term approach to gold purchases," Cho Sok-pang, head of the Reserve Management Group's planning department, said. "Rather than buying mechanically based on price movements, our focus is on gradually increasing the share of gold in our reserves."

Some analysts question the practical impact. A senior financial industry official said the 4-5 tons of annual export-bound gold is too small to meaningfully expand reserves, and that if the market perceives the BOK as buying gold on price expectations, it could stir speculative sentiment.

This article is for informational purposes only and does not constitute investment advice.