SEOUL: Kim, a businessman in Seoul, has been buying gold at the gold trading market operated by the Korea Exchange (KRX) since last year. He has bought around 200 kilograms of gold so far, investing almost 10 billion won.As the wealthy are turning their eyes to gold as an attractive investment, trading has surged notably at the market.
Average daily trading surpassed 10 kilograms for the first time in April, according to the KRX up from March when it stood at 7 kilograms.
“Following the falling gold prices, individual investors have been increasing purchases, betting the price will reverse course,” a spokesman for the KRX said.The average gold price for April stood at 42,341 won per gram, down 1.3 percent from March.
The gold investment has been increasing since October when the international gold price stood at between $1,100 and $1,200 an ounce. The investment temporarily lost steam, but is increasing again as the price fell to the $1,100-$1,200 range again. The key rate cut by the central bank also prompted the affluent to buy gold instead of depositing money in banks.
As a result, individual investors have notably increased. At the KRX gold market, individuals now take 59.3 percent of investors, with the ratio continuously rising since the third quarter of last year when they took 50.9 percent.
They find gold even more attractive due to tax. Gold bought at the KRX is exempt from the 3 percent customs duty. It is also exempt from dividend income and capital gains taxes.For those investing at the KRX gold market, a 10 percent value added tax is levied only when they withdraw the gold from the account.
Those who buy gold at jewelry shops, meanwhile, often plan to give the gold to their children to avoid gift or inheritance taxes. Gold at jewelry shops is subject to a 10 percent value added tax, but this is often avoided through unlawful trading.
Kim Moon-il, an analyst at Eugene Investment and Futures, said that the gold price may rise when the dollar weakens from the mid-term perspective.However, he said that the stock market matters more than the value of the dollar in determining the direction of the gold.
“If the New York stocks become bullish, global funds would want to buy stocks while selling gold, the safety asset. Investment returns matter most for them,” Kim said.
