Tags: South Korea Central Bank Mulls Buying More Gold

South Korea Central Bank Mulls Buying More Gold

Tuesday, 19 Oct 2010 09:29 AM

South Korea is weighing the idea of buying gold to diversify its $290 billion of currency reserves, the fifth-biggest stash in the world.

The Bank of Korea currently has just 0.2 percent of its reserves devoted to gold. That’s 14 metric tons, which makes it one of the smallest holders among highly developed economies, the Financial Times reports.

The world average is 10 percent, according to the World Gold Council. And countries such as the United States, Germany and France devote more than half of their foreign exchange reserves to the precious metal.

To be sure, the central bank says it will move cautiously with prices at record highs.

“We need to give careful consideration to the matter of increasing gold volumes in the foreign reserves,” Bank of Korea Gov. Kim Choong-soo told a parliamentary committee Monday, the FT reports.

Still, any purchases by the central bank would be quite bullish for the market. This marks the first time it has raised the issue publicly, having shunned the idea previously.

Other Asian central banks already have been active buyers, including China and India.

As for the United States, former top Federal Reserve official Edwin Truman says it should consider selling its $340 billion of gold reserves to slash the government’s debt.

“If the U.S. were to sell its entire gold stock, it would reduce the gross government debt by 2¼ percent of gross domestic product,” he writes in the FT.

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South Korea is weighing the idea of buying gold to diversify its $290 billion of currency reserves, the fifth-biggest stash in the world. The Bank of Korea currently has just 0.2 percent of its reserves devoted to gold. That s 14 metric tons, which makes it one of the...
South Korea Central Bank Mulls Buying More Gold
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2010-29-19
Tuesday, 19 Oct 2010 09:29 AM
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