Korea ranks 57th in gold reserves

By Kang Seung-woo

Korea saw its ranking in gold reserves fall by one notch to 57th in the world this year, as other countries rushed to secure the yellow metal amid lingering uncertainties overhanging the global economy, the World Gold Council (WGC) said Thursday.

According to the WGC, an international nonprofit body that offers key information about gold, Korea’s gold reserves stood at 14.4 tons as of December.

Korea’s gold holdings have been standing pat since the second quarter of last year when they increased from 14.3 tons to 14.4 tons. Gold represents 0.2 percent of the nation’s foreign exchange reserves, the eighth smallest along with Canada among 100 countries surveyed.

The United States topped the list by holding 8,133.5 tons of gold, followed by Germany with 3,401.8 tons. The International Monetary Fund (IMF), France and China rounded out the top five with 2,846.7 tons, 2,435.4 tons and 1,054.1 tons, respectively.

Korea’s gold holdings remain at 0.18 percent of the United States, 1.37 percent of China and 1.89 percent of Japan, according to WGC data.

Emerging countries’ aggressive purchase of the precious metal was attributed to Korea’s fall in the pecking order. Many others are increasing their gold stash on the belief that it is the safest investment asset when economic uncertainties remain high, experts say.

Russia, which hoards 775.2 tons, took in a total of 65.4 tons of gold between July and October, while Bangladesh, the Philippines and Thailand bought 10 tons, 4 tons and 15.6 tons of gold, respectively, during the same span.

In addition, the government’s lack of interest in gold as an investment vehicle in upping the foreign exchange reserves also affected the low amount.

During the annual parliamentary inspection of the Bank of Korea (BOK) in October, lawmakers claimed that the BOK should raise the proportion of gold in its foreign reserves amid high-rising prices. Gold for February delivery closed at $1,383.20 an ounce Wednesday at the Comex division of the New York Mercantile Exchange.

Rep. Lee Jong-koo of the Grand National Party (GNP) took issue with the foreign reserve portfolio dominated by the U.S. dollar.

“The United States is on pace to suffer a fiscal deficit of $1.3 trillion this year, so the dollar weakening is expected to continue. The BOK needs to increase the proportion of gold in dealing with the foreign exchange reserves,” he said.

“The Ministry of Strategy and Finance is in talks with the BOK to decide whether Korea will additionally buy gold or not, but it is not easy to make a decision due to its price fluctuations,” said an official of the finance ministry.