By Kang Seung-woo
Staff reporter
The nation's gold account posted a surplus for the 18th straight month in March as global demand for the precious metal has been on the rise with investors flocking to safe assets in the wake of the global financial crisis.
The Bank of Korea (BOK) said Friday that the gold account, which excludes gold holdings by the central bank for foreign reserves, has been in positive territory from October 2008 until March this year. The accumulated surplus during the period reached $2.19 billion (2.60 trillion won).
This is a very rare phenomenon as the gold account used to be in negative territory, meaning that the county sees more gold flowing in rather than out.
Analysts attribute the current phenomenon to rising demand for gold as a safe haven.
According to them, gold prices have been soaring due to growing uncertainties over the financial markets triggered by Southern Europe's debt crisis.
"Recently, investment-related gold demand has been growing faster than that for jewelry or industry," an economist said.
Before the on-going surplus, Korea had mostly run into red figures within the gold trade.
One exception is during the Asian financial crisis in 1997 and 1998, when South Koreans waged a nationwide campaign to collect gold to help raise funds to recover from the economic turmoil.
Thanks to the unprecedented movement, Korea, within a few months, hit a surplus for 12 consecutive months.
Gold transactions dropped from $3.86 billion from the third quarter of 1997 to $310 million in the fourth quarter of 2005, but rebounded to surpass $1 billion in the fourth quarter of 2009 and in this year's first three months.
''I have no clue to explain the continuous surplus since the Asian financial crisis turmoil," a BOK official said.
"I do not know about the official trade, but staying in the black might have to do with smuggling in a bit to earn marginal profits from prices in and out of Korea," a KCS official said.
Although gold weakened Friday (KST), losing $4.50 to $1,188.60 an ounce, it had accelerated to a record high of $1248.95 an ounce last week.