Korea buys gold to help it deal with “the international financial environment”

Central banks in the east, particularly china, have been increasing their gold stock for years. And now it seems Korea is joining the party as it purchased 14 tonnes of gold in November. This increases it gold reserves to 84.4 tonnes likely raising its ranking among central banks from 40th to 36th.

Today GATA pickup on a Reuters report on the gold purchase:

SEOUL, South Korea — South Korea’s central bank said on Wednesday it bought 14 tonnes of gold in November using its foreign reserves in order to spread its portfolio risks, while releasing data showing total reserves rose after talk of market intervention.

The Bank of Korea bought the gold for $780 million, the fourth purchase in about 1 1/2 years, lifting the proportion of gold in its total foreign reserves to 1.2 percent from the previous 0.9 percent, it said in a statement.

“Gold is a physical, safe asset and allows” the country “to deal with changes in the international financial environment more effectively,” it said in a statement, without providing more details on the purchase.

The Bank of Korea now holds 84.4 tonnes of gold, valued at $3.76 billion in terms of purchase prices, up nearly six-fold from 14.4 tonnes before June last year.

The Bank of Korea made its first gold purchase in more than a decade between June and July last year, joining some central banks in diversifying their increasing foreign reserves away from the U.S. dollar and low-yielding government bonds.

Official-sector buying has become a key factor supporting gold demand and prices in recent years.

South Korea’s gold buying “points to stronger support for gold prices from central banks,” said Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS, a metals consultancy. “If private-sector investment falters and prices dip, central banks’ buying supports prices at higher levels than if this demand were not present. It is a substantial additional source of demand for gold bullion.”

Central banks around the world bought a total of 351.8 tonnes of gold in the first nine months of 2013, up 2 percent from a year earlier, data from the World Gold Council showed.

In comparison, private-sector gold investment demand during the period dropped nearly 8 percent on the year to 1,139.3 tonnes, the data also showed.

Spot gold traded just below $1,700 an ounce on Wednesday, up more than 8 percent so far this year.

The Bank of Korea said it now expected its ranking among central banks around the world in terms of gold holdings to rise to 36th from 40th.

Meanwhile, the central bank said foreign reserves rose by $2.6 billion last month to a record $326.09 billion, extending its record-breaking streak to a fourth consecutive month. It attributed the increase to investment gains but the data came after reports by traders of dollar-buying intervention by South Korean authorities during the month to curb the won’s rapid appreciation.

On Nov. 22 alone, currency traders estimated authorities bought up to $1 billion in the local currency market to temper a stronger won, which hurts the competitiveness of South Korean exporters.

Central bank officials declined to comment on the talk of intervention.

South Korea, which had the world’s seventh-largest foreign exchange reserves as of the end of October, held 91.7 percent of its reserves in the form of securities.

2012 Q3 Gold Reserver numbers (in tonnes) from the World Gold Council:

1	Euro Area (incl. ECB)	10,787.44
2	United States	8,133.46
3	Germany	3,395.54
4	International Monetary Fund (IMF)	2,814.04
5	Italy	2,451.84
6	France	2,435.41
7	China, P.R.: Mainland	1,054.09
8	Switzerland	1,040.07
9	Russian Federation	934.53
10	Japan	765.22
11	Netherlands	612.45
12	India	557.75
13	Bank for International Settlements (BIS)	509.82
14	European Central Bank	502.07
15	Taiwan	423.63
16	Portugal	382.48
17	Venezuela, Republica Bolivariana de	363.91
18	Saudi Arabia	322.90
19	United Kingdom	310.25
20	Turkey	302.35
21	Lebanon	286.83
22	Spain	281.61
23	Austria	279.99
24	Belgium	227.46
25	Philippines	194.59
26	Algeria	173.64
27	Thailand	152.41
28	Singapore	127.40
29	Sweden	125.72
30	South Africa	125.07
31	Mexico	124.98
32	Libya	116.64
33	Greece	111.82
34	Kazakhstan	104.00
35	Romania	103.72
36	Poland	102.92
37	Australia	79.85
38	Kuwait	78.96
39	Egypt	75.61
40	Indonesia	73.09
41	Korea, Republic of	70.44
42	Denmark	66.55
43	Pakistan	64.43
44	Argentina	61.74
45	Belarus	49.74
46	Finland	49.14
47	Bolivia	42.34
48	Bulgaria	39.92
49	West African Economic and Monetary Union (WAEMU)	36.48
50	Malaysia	36.39
51	Brazil	35.35
52	Ukraine	35.15
53	Peru	34.68
54	Slovak Republic	31.79
55	Ecuador	26.28
56	Syrian Arab Republic	25.82
57	Morocco	22.05
58	Afghanistan, Islamic Republic of	21.87
59	Nigeria	21.37
60	Serbia, Republic of	14.92
61	Cyprus	13.87
62	Bangladesh	13.51
63	Cambodia	12.44
64	Qatar	12.41
65	Czech Republic	11.58
66	Colombia	10.35
67	Lao People’s Democratic Republic	8.88
68	Ghana	8.74
69	Sri Lanka	8.26
70	Paraguay	8.19
71	Latvia	7.74
72	El Salvador	7.25
73	Guatemala	6.89
74	Macedonia, FYR	6.79
75	Tunisia	6.75
76	Ireland	6.00
77	Iraq	5.87
78	Lithuania	5.82
79	Bahrain, Kingdom of	4.67
80	Mauritius	3.91
81	Mongolia	3.64
82	Canada	3.39
83	Mozambique	3.27
84	Slovenia	3.17
85	Aruba	3.11
86	Hungary	3.08
87	Netherlands Antilles	3.00
88	Kyrgyz Republic	2.94
89	Suriname	2.31
90	Luxembourg	2.24
91	China, P.R.: Hong Kong	2.08
92	Bosnia and Herzegovina	1.99
93	Iceland	1.98
94	Albania	1.57
95	Honduras	0.67
96	Dominican Republic	0.57
97	Mauritania	0.36
98	Malta	0.31
99	Uruguay	0.26
100	Estonia	0.25
101	Chile	0.25
102	Costa Rica	0.06
103	Burundi	0.03
104	Fiji	0.02
105	Oman	0.02
106	Comoros	0.02
107	Kenya	0.02
108	Armenia, Republic of	–
109	Cameroon	–
110	CEMAC	–
111	Central African Republic	–
112	Chad	–
113	Congo, Republic of	–
114	Croatia	–
115	Eritrea	–
116	Gabon	–
117	Haiti	–
118	Jordan	–
119	Malawi	–
120	Nepal	–
121	Nicaragua	–
122	Norway	–
123	Papua New Guinea	–
124	Tajikistan	–
125	Trinidad and Tobago	–
126	United Arab Emirates	–
127	Yemen, Republic of	–

• Category: News
• Tag: China, Gold, gold reserves, Korea