Bank of Korea Buys Physical Gold for First Time in 13 Years, Acquiring ~1 Ton in December
nashnova research
The Bank of Korea will purchase roughly 1 tonne of domestically produced physical gold in December, worth about $140 million — its first physical gold buy since February 2013, marking a formal shift from indirect to direct holdings in its reserve-diversification strategy.
What exactly is the BOK buying after 13 years?
The Bank of Korea plans to complete its first transaction on December 14, acquiring about 1 tonne of domestic physical gold valued at roughly 200 billion won (~$140 million).
This is the central bank's first physical gold purchase since it stopped buying in February 2013 — a gap of nearly 13 years.
The Korea Exchange upgraded its gold-market trading, custody, and settlement systems specifically for this deal. This means → the infrastructure was built before the buy, not after — this was planned, not improvised.
Why settle in won instead of dollars?
A key arrangement: the BOK will pay in Korean won, buying output that domestic gold producers had originally earmarked for export.
This means → the central bank adds gold without drawing down foreign-exchange reserves, while also reducing gold outflows from the country.
In plain terms = buy domestic gold with the local currency — more gold on the balance sheet, zero dollars spent, and a marginal boost to the trade account.
From ETF to physical — what does the path change signal?
In Q2 this year the BOK already bought about $250 million in gold ETFs — exchange-traded funds that hold gold indirectly through securities — as a first step.
Now it is moving to physical gold and building dedicated transaction infrastructure. This means → this is not a one-off purchase but the starting point of a systematic reserve-expansion plan.
This reflects a shift from "testing the waters" to "building the plumbing and formalizing the process."
How large is Korea's gold stockpile?
As of end-August, the BOK held 104.4 tonnes of physical gold, worth roughly $14.88 billion at market prices — about 3.4% of total foreign-exchange reserves, ranking 39th globally.
Adding ~1 tonne lifts total holdings by less than 1% — the volume itself is small.
But lawmaker Jung Tae-ho (정태호) called it "a meaningful first step" in diversifying Korea's reserves. In plain terms = the size doesn't matter; what matters is that the door is now open.
Why did it stop for 13 years — and why restart now?
Before 2013 the BOK had been steadily adding gold, but falling gold prices drew political criticism, and purchases were halted.
The restart comes against three overlapping pressures: rising geopolitical risk, a sustained global central-bank gold-buying wave, and criticism that Korea's gold share is too low.
The BOK officially announced the resumption of physical gold purchases in August this year. This means → the policy wind has shifted from "afraid of being blamed for buying" to "afraid of being blamed for not buying."
What to watch next?
The core test: whether this purchase evolves into a sustained accumulation programme or becomes another "buy once, then stop."
If regular purchases follow, Korea's 3.4% gold share will gradually converge toward the global central-bank average.
In plain terms = the first step is taken; the real signal is when — and whether — steps two and three arrive.
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