Gold glittering amid uncertainties --Exchange expects precious metal to attract growing investment--

Korea Gold Exchange 3M President Kim An-mo, 46, shows a 1-kilogram gold bar valued at 51 million won ($47,000) during an interview with The Korea Times at his office in Jongno-gu, central Seoul, Friday.
/ Korea Times photo by Choi Kyong-ae

By Choi Kyong-ae

Korea Gold Exchange 3M, the country's biggest gold provider by value, said gold will continue to shine as a good and safe investment tool compared to stocks and other items amid growing economic uncertainties.

"Interest rates continue to fall. Stock investments may end up with huge losses or small gains at best. Properties still remain a preferred investment item, but they are not immediately cashable," Korea Gold Exchange 3M President Kim An-mo told The Korea Times in a recent interview.

Gold is emerging a good alternative to those traditional investment tools as the precious metal will not sharply lose its value and can be immediately liquidated into cash in the case of an emergency, Kim said.

Korea is the world's seventh-biggest gold producer, but it is at an initial stage in gold investment. However, people's attitude toward gold investment is changing, he said.

"Last year, investors bought gold in bargain hunting as the metal's price was declining. But this year, they buy gold to avoid possible financial losses related to territorial disputes, possible defaults in debt-ridden countries, falling oil prices and record-low interest rates."

In 2014, Korea produced 54.5 tons of gold valued at 2.8 trillion won ($2.5 billion). Korea Gold Exchange 3M handled 16 tons, or 29 percent of the total. Helped by Koreans' changing investment appetite, the company has enjoyed an average of 10 percent annual sales growth over the past three years.

The price of a 3.75 gram gold bar fell to 220,000 won as of Friday from an average of 300,000 won in September 2011. Globally, however, gold prices nearly doubled to $1,160 per ounce at the end of 2014, from $632 at the end of 2006, according to the company.

These days, the demand for mini gold bars which weigh from 3.75 grams to 100 grams is rising. In the past, many believed that gold investment was limited to high-income earners.

Korea Gold Exchange 3M currently provides gold bars to major financial firms such as KB Kookmin, Woori and Hana banks and Samsung Securities. It will also supply gold bars to E-Trade Securities, and Daegu and Busan banks, Kim said.

Korea Gold Exchange 3M, set up in 2005, aims for 1 trillion won in sales this year, up 30 percent from 768 billion won a year earlier. It increased its capital to 40 billion won in 2014 from 100 million won in 2005. The 3M in the company's name is a reference to the initials of the family name of Kim and his two brothers.

As of the end of January, Korea had $362.2 billion in foreign-exchange reserves and gold accounted for $4.8 billion, or 13 percent, of the total, according to the Bank of Korea.

Meanwhile, the Korean government introduced a gold exchange at the main Korea Exchange last year to boost gold transactions. However, only 10 kilograms of gold are traded each day at the exchange due to transaction taxes and other costs.

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