The Bank of Korea has invested in gold through an ETF for the first time in 13 years.
The Bank of Korea has disclosed investments in a gold exchange-traded fund (ETF) for the first time in 13 years. The amount totaled $250 million. This is the regulator's first transaction involving precious metals in the past 13 years.
The decision gives Korea's central bank access to gold price dynamics. However, its own bullion reserves did not increase as a result.
Report showed a $250 million position in a gold ETF
As of the end of June, the Bank of Korea held 679,765 shares of the SPDR Gold Shares fund. This stake was valued at $250.4 million — data provided in a report to the U.S. Securities and Exchange Commission (SEC).
The same document lists three other assets. The total value of all four positions is $3.89 billion. Gold accounted for about 6.4% of the portfolio. Three months ago, this position was not yet present in the bank's official reports.
Gold ETFs are considered securities and are part of South Korea's foreign exchange reserves. Physical gold belongs to a separate long-term reserve. After the ETF purchase, the Bank of Korea maintained its official bullion reserves at 104.4 tons — a figure unchanged since 2013.
In early August, the regulator reported that it had developed a mechanism for purchasing gold domestically. This is the first such step in nearly 60 years.
Central bank gold purchases reached a record
From April to June, other global central banks bought a total of 289 tons of gold on a net basis. According to the World Gold Council, this is a record volume for the second quarter in the history of observations.
Poland led the way, increasing its reserves by 51 tons. The Bank of Korea did not participate in these purchases — its last acquisition was in 2013, when it bought 20 tons. For comparison: China added approximately 20 tons to its gold reserves in just the past July.
Investor demand has also changed. Gold funds attracted $3 billion in July, breaking a two-month streak of outflows. Whether the Bank of Korea will remain in the ETF or purchase physical gold will be shown by future reserve reports.
My comment: The Bank of Korea's decision is a signal of a shift in its approach to reserve management. Using an ETF instead of physical gold provides flexibility and liquidity but does not add weight to official statistics. This is a reasonable compromise for a regulator that wants to diversify but is not yet ready for large-scale bullion purchases.