Gold Rush

Mr. Lee (34), who is working for a big company, got into gold investing early last year. He is investing 300,000 won a month in “Gold Riche,” a gold commodity of Shinhan Bank

He said that it is really fun to check the gold price and its earning ratio everyday. After hearing news that the International Monetary Fund will sell off a 400ton lump of gold early this month, he looked for analysis articles about how this would affect the international gold price.

Lee said, “A year of investment led to 12 percent profits. Since investing in gold, I got interested in the international economy and now, I think my eyes have become wide open.”

He meets members of a gold investment club once or twice a month and exchanges investment information. Most of them are 30-something office workers.

Gold investment is a boom among young office workers interested in financial techniques.

Shinhan Bank, the only bank to sell a gold commodity, said that the gold trade has doubled from 380kg in November 2006 to 748kg in January this year.

The recent increase in the gold price is one reason for the soaring, but a bigger reason is that an increasing number of individual investors want to open gold commodity accounts after hearing that the earning rate from gold investment is good.

The number of gold commodity accounts has gone up from 5,670 in late June 2006 to 9,360 in late January this year.

Goldinfo, an information website on gold investment, has some 5,000 daily average visitors. The site’s operator said, “From last year, the number of visitors surged and the server has often become frozen. So, we are restricting new members from joining.”

Yu Yu-jeong, head of the commodity development team at Shinhan, said, “Traditionally, wealthy people in their 50s or older have been interested in gold, but recently, the number of young people who invest in gold by putting a certain amount monthly has drastically jumped.”

With the sale of Shinhan’s convenient gold commodity in the form of non-physical transactions, young people have started to show interest in gold investment.

Physical transactions mean purchases of gold bars in 100g, 500g and 1kg units in person, which the London Bullion Market Association acknowledges. The gold bar price for the minimum size unit, 100g, was 1,968,937 won as of February 7.

The purchase of the actual article comes with a five percent trade commission and a ten percent value added tax.

On the other hand, in the case of non-physical transactions, investors put money in their account, the bank buys gold in their name and returns profits according to the gold price when they withdraw the investment. There is a commission of 1.2 percent of net price received when selling the investment. Still, this is far more profitable as there is no tax on investment profits.