Not Forte
Justice Party lawmaker Park Won-seok, who is a member of the Strategy and Finance Committee of the National Assembly, said on July 26 that the gold that the Bank of Korea purchased between 2011 and 2013 has incurred losses of approximately 1.8 trillion won (US$1.5 billion), which is equivalent to 33 percent of the price it paid.
The international gold price has continued to decline for five weeks in a row with an interest rate hike by the Fed around the corner. On July 24, it dropped to US$1,085.5 per troy ounce, about half of the peak of 2011.
The Bank of Korea bought 90 tons of gold between 2011 and 2013 at a price of approximately US$4.71 billion. Specifically, the central bank of Korea purchased 40 tons of gold in 2011, 30 tons in 2012, and 20 tons in 2013 to increase its gold reserves from 14.4 tons to 104.4 tons between August 2010 and 2013.
At present, 90 tons of gold is worth about US$3.14 billion, which means the central bank lost US$1.57 billion over those three years. The losses may increase as the international gold price continues to fall.
Goldman Sachs recently predicted that the price would fall below US$1,000 per ounce. The Bank of Korea, however, said that the purchase of gold is more for long-term investment portfolio diversification than for short-term gains.