The Bank of Korea invested a total of $250 million in overseas-listed gold ETFs in the second quarter, marking the central bank's first foray into gold investment in 13 years. The move is expected to expand into physical gold purchases, and the share of gold-related assets in South Korea's foreign exchange reserves is forecast to grow as a result.
According to a report the Bank of Korea submitted to the US Securities and Exchange Commission on Friday, the central bank added 679,765 shares of SPDR Gold Trust (GLD) — one of the world's major gold ETFs — as of the end of June, at an investment value of approximately $250 million. It is the first time the Bank of Korea has invested in a gold-related ETF.
Earlier, the Bank of Korea signaled it was pursuing gold purchases for the first time in 13 years, saying it had built a cooperative framework with domestic gold producers, the Korea Exchange and the Korea Securities Depository to lay the institutional groundwork for buying domestically produced gold. The central bank also said it "began purchasing gold ETFs on a very small scale in the second quarter," and went on to say that "because ETFs are recognized as securities, they do not affect the gold-holdings ratio in foreign exchange reserve statistics."
The Bank of Korea also held $1.32 billion in Vanguard S&P 500 ETF (VOO) and $1.31 billion in iShares Core S&P 500 ETF (IVV), both of which track the S&P 500 index. It also held around $1 billion in iShares Core MSCI Intl (IXUS), which invests in developed-market equities outside the United States. However, compared with the end of March, its holdings in VOO and IVV fell by 10.8 percent and 11.4 percent, respectively, while its IXUS position shrank by 14.4 percent.
kimstar@heraldcorp.com
