By Choi Kyong-ae
The Korea Minting, Security Printing and ID Card Operating Corp. (KOMSCO) is seeking approval from the Bank of Korea (BOK) to produce gold bullion coins as it needs new earnings sources, a KOMSCO official said Wednesday.
"The demand for notes has fallen sharply due to an increased use of credit cards and the supply of high denomination 50,000 won notes in 2009. We need a breakthrough to support our bottom line, such as gold bullion coins," the official said.
Gold is often seen as an alternative store of value during periods of economic uncertainty. Coins are favored by price-savvy mom-and-pop buyers ― who often stock up when the market dips, reasoning that they will hold their value for the long term ― because coins are far cheaper than the larger bars bigger investors buy.
Minting corporations in countries such as the U.S., Great Britain, Australia and China produce bullion coins to meet demand from gold investors and coin collectors.
KOMSCO produced 2 billion notes in 2007, but the figure plunged to 600 million and 700 million notes per year over the past two years, respectively. It posted 427.6 billion won (about $400 million) in sales in 2014, which was little changed from 427.1 billion won a year earlier. KOMSCO earned 62 percent of its sales from the production of notes in 2007, but the ratio fell to 28 percent last year.
"Unless there are countermeasures, the declining output of notes will further weigh on the company's earnings results," KOMSCO Chief Executive Kim Hwa-dong recently told reporters.
As KOMSCO earned 20 percent of its sales from gold bars in 2013 and 2014, the company sees great potential in gold coins which vary in weight compared to bars.
But the push for gold coins may end up as wishful thinking without approval from the central bank.
"We have not received any official request from KOMSCO when it comes to gold coins. We have not considered giving approval to allow it to produce gold coins," an official at the BOK's Currency Department said.
The BOK official said even without approval from the central bank, KOMSCO can produce gold products in the form of medals. Gold coins are legal currency so it takes approval from the central bank before production.
Despite the BOK's disapproval of its gold bullion push, the KOMSCO official said the state-run minting company will continue its efforts to "persuade the central bank to consider the idea."
The Korea Minting, Security Printing and ID Card Operating Corp. (KOMSCO) is seeking approval from the Bank of Korea (BOK) to produce gold bullion coins as it needs new earnings sources, a KOMSCO official said Wednesday.
"The demand for notes has fallen sharply due to an increased use of credit cards and the supply of high denomination 50,000 won notes in 2009. We need a breakthrough to support our bottom line, such as gold bullion coins," the official said.
Gold is often seen as an alternative store of value during periods of economic uncertainty. Coins are favored by price-savvy mom-and-pop buyers ― who often stock up when the market dips, reasoning that they will hold their value for the long term ― because coins are far cheaper than the larger bars bigger investors buy.
Minting corporations in countries such as the U.S., Great Britain, Australia and China produce bullion coins to meet demand from gold investors and coin collectors.
KOMSCO produced 2 billion notes in 2007, but the figure plunged to 600 million and 700 million notes per year over the past two years, respectively. It posted 427.6 billion won (about $400 million) in sales in 2014, which was little changed from 427.1 billion won a year earlier. KOMSCO earned 62 percent of its sales from the production of notes in 2007, but the ratio fell to 28 percent last year.
"Unless there are countermeasures, the declining output of notes will further weigh on the company's earnings results," KOMSCO Chief Executive Kim Hwa-dong recently told reporters.
As KOMSCO earned 20 percent of its sales from gold bars in 2013 and 2014, the company sees great potential in gold coins which vary in weight compared to bars.
But the push for gold coins may end up as wishful thinking without approval from the central bank.
"We have not received any official request from KOMSCO when it comes to gold coins. We have not considered giving approval to allow it to produce gold coins," an official at the BOK's Currency Department said.
The BOK official said even without approval from the central bank, KOMSCO can produce gold products in the form of medals. Gold coins are legal currency so it takes approval from the central bank before production.
Despite the BOK's disapproval of its gold bullion push, the KOMSCO official said the state-run minting company will continue its efforts to "persuade the central bank to consider the idea."
