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Bank of Korea Increases Gold Reserves by Massive Nearly $1 Billion or 39% in November Alone

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From Gold Core

Bank of Korea Increases Gold Reserves by Massive Nearly $1 Billion or 39% in November Alone

Gold is trading at USD 1,752.90, EUR 1,298.30, GBP 1,116.10, CHF 1,604, JPY 136,700 and AUD 1,706.4 per ounce.
Gold’s London AM fix this morning was USD 1,751.00, GBP 1,116.50, and EUR 1,298.29 per ounce.
Yesterday's AM fix was USD 1,750.00, GBP 1,113.02, and EUR 1,298.03 per ounce.

Cross Currency Rates

Gold is marginally higher in most currencies and is headed for its biggest weekly advance in six weeks after also seeing a gain of 1.8% in November. Gold’s technical picture has become positive again and is now aligned with the very positive fundamental backdrop.

The Bank of Korea’s continued diversification of its foreign exchange reserves is a bullish factor which may have led to the price gains today.

The central bank of South Korea announced that it had purchased 15 metric tonnes of gold in November to raise its reserve of bullion in an effort to diversify its portfolio of its foreign reserve investment and reduce risks caused by market volatilities.

According to the Bank of Korea (BOK), it made a purchase of 15 tons of gold last month to increase the nation’s gold reserves to 54.4 tons worth $2.17 billion as of the end of November.

It boosted the size of its gold reserves by US$850mn in November, up a massive 39% from the previous month. Its total gold reserves are now worth US$2.17bn.

 

The purchase was the central bank’s second acquisition of gold this year. It bought 25 tons of bullion in June and July for the first time in 13 years.

Thanks to the buying, the gold reserves of Asia’s fourth-largest economy jumped by three notches to 43rd in the rankings of the World Gold Council.

Based on the October reading, Korea is the eighth-largest holder of foreign exchange the world behind China, Japan, Russia, Taiwan, Brazil, Switzerland and India.

The Bank of Korea said its gold holdings account for just 1% of its foreign-exchange reserves. 

“The BOK purchased gold last month in a bid to diversify its portfolio of foreign exchange reserves,” Lee Jung, head of the investment strategy team at the BOK’s Reserve Management Group, told reporters.

"Demand for gold is increasing as a hedge against global inflation amid the persistent sovereign-debt crisis in Europe," Lee was quoted as saying.

"The gold purchase will help us cope with volatile global financial markets and enhance investor confidence in Korea in times of crises."

 

The move comes as other central banks across the world are again diversifying into gold amid the worsening financial turmoil in the eurozone. The European sovereign debt crisis is lurching towards contagion and showing signs of spreading to France and Germany, the top two strongest economies in the region.

Mexico has bought 98 tons of gold this year, followed by Russia and Thailand, which purchased 63 tons and 53 tons, respectively, with the total official acquisition of gold reaching around 350 tons.

South Korea’s foreign exchange reserves stood at $308.63 billion at the end of November, down $2.35 billion from the previous month, as the euro, pound, yen and dollar all fell in value versus gold.

Foreign reserves consist of securities and deposits denominated in overseas currencies, along with IMF reserve positions, special drawing rights and gold bullion.

It is the second time Korea has bought gold to diversify its foreign exchange reserves this year. It purchased 25 tons of gold between June and July -- its first purchase since the 1997-98 Asian financial crisis.

No details were given as to from where the sizeable tonnage of gold was bought in November – whether it be inter central bank or from refiners or bullion banks. Nor was information forthcoming as to whether the Bank of Korea is storing their gold reserves in the central bank in Seoul.

Asian governments have become increasingly concerned about the problems in the West, with European leaders struggling under the weight of a crippling sovereign debt crisis that threatens the end of the eurozone and the euro.

The United States has a debt crisis of its own with politicians unable to agree a plan to bring down the country's titanic deficit, which sits at more than $15 trillion and increased another $160 billion in the last two weeks alone.

The ongoing woes have led to forecasts of further gold purchases, especially from Asia.

Gold is becoming increasingly attractive to central banks worldwide due to the global financial crisis and concerns for the outlook for the global reserve currency, the dollar and the euro and all fiat currencies.

European central banks have stopped selling gold. China, which has the world's biggest foreign-currency reserves, has been increasing its gold holdings mainly through domestic producers.

As we have been saying for some time, gold makes up a miniscule 1.6% of China’s foreign exchange reserves. People’s Bank of China buying alone could support gold prices in the coming months and years.

The world average for central-bank gold holdings as a share of foreign-currency reserves is has increased marginally to 11%. The U.S., still the world’s largest gold holder of gold bullion, bullion makes up 74% of foreign exchange reserves.

The fundamentals for gold remain very bullish and yet gold remains largely taboo in the non specialist financial media. The fundamentals and the facts of the gold market remain unknown by the majority of the market which is bullish.

Total above ground stocks of refined gold bullion remain tiny vis-à-vis stock, bond, foreign exchange and derivative markets.

Even a small shift in allocations from these markets and into physical bullion has the potential to lead to much higher prices.
 
For breaking news and commentary on financial markets and gold, follow us on Twitter

NEWS

(Reuters) -- Gold steady, eyes U.S. jobs data
http://www.reuters.com/article/2011/12/02/us-markets-precious-idUSTRE7AK...

(Reuters) -- ECB opens door to action, Sarkozy seeks new treaty
http://www.reuters.com/article/2011/12/02/us-eurozone-idUSTRE7AR0P320111...

(Bloomberg) -- Bank of Korea Boosts Gold Reserves for Second Time This Year
http://www.businessweek.com/news/2011-12-01/bank-of-korea-boosts-gold-re...

(Mining Weekly) -- Coeur would mull holding silver over cash, says CEO
http://www.miningweekly.com/article/coeur-would-mull-holding-silver-over...

(Bullion Street) -- Indians hold 12,000 tons more gold than Chinese
http://www.bullionstreet.com/news/indians-hold-12000-tons-more-gold-than...

COMMENTARY

(ZeroHedge) -- UBS On "How Bad Might It Get" And Why "Sooner Or Later Intense Instability Will Resume"
http://www.zerohedge.com/news/ubs-how-bad-might-it-get-and-why-sooner-or...

(ZeroHedge) -- US Debt/GDP Hits Post WW2 High 99.5%- $55 Billion Overnight Debt Increase: Total Debt Now $15.1 Trillion
http://www.zerohedge.com/news/us-debtgdp-hits-post-ww2-high-995-followin...

(Reuters) -- Hank Paulson’s Inside Jobs
http://blogs.reuters.com/felix-salmon/2011/11/29/hank-paulsons-inside-jo...

(KingWorldNews) -- This is a Case of Systemic Solvency & Control
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/1_KW...

_This_is_a_Case_of_Systemic_Solvency_%26_Control.html
(Wall Street Journal) -- MF Global and the New Era of Crony Capitalist Regulation
http://online.wsj.com/article/SB1000142405297020371620457701769098842704...

 

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Fri, 12/02/2011 - 09:24 | 1937911 CPL
CPL's picture

Only country so far to dump all of their TBills before all this nonsense started.

Fri, 12/02/2011 - 09:31 | 1937919 Pladizow
Pladizow's picture

How do we short Roubini?

Twitter that bitch!

Fri, 12/02/2011 - 09:38 | 1937983 MFL8240
MFL8240's picture

He is a complete idiot and the fact that his guess on the odviuos houing mess came true, nothing else he has said has been right.  Listen to Jim Rogers and Jim Willie, they both get it.

Fri, 12/02/2011 - 10:07 | 1938137 mrgneiss
mrgneiss's picture

Great Jim Puplava interview with Ann Barnhardt, she says some mind-blowing stuff about Jon Corzine, regulators, CME, the US etc, but nothing anyone here will be too surprised about; I hope she watches her back.

http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/12/01/ann-barnhardt/entire-futures-options-market-destroyed-by-mf-global-collapse

Fri, 12/02/2011 - 10:15 | 1938179 grey7beard
grey7beard's picture

>> interview with Ann Barnhardt,

Anyone who frames this in a partisan viewpoint loses all credibility with me.  You've got two crime families in bed with each other and laying the blame on partisan lines is idiotic.  If one can be blind to the corruption in one party, how clear could their vision be?

 

 

Fri, 12/02/2011 - 10:39 | 1938291 mrgneiss
mrgneiss's picture

I agree that in terms of crony capitalism and the oligarchy, the left/right paradigm is a false dichotomy as most here realize - but looking at the MF Global situation specifically - Corzine is buddies with Obama - Obama has appointed the regulators or left them in place - and the regulators have failed their duty with regard to MF Global in a big way.

So in general I agree with your comments, but when it comes to MF Global, Obama and his administration have failed the people miserably - it's a rather inescapable conclusion.

Also, I don't believe Ann mentioned much about parties if anything - she just talks about people and organizations like the CME who have failed us.

I really think you do a disservice to the interview by bringing this up, no one listening to this can come away with the impression this interview had much if anything to do with partisan politics.

Fri, 12/02/2011 - 11:01 | 1938385 grey7beard
grey7beard's picture

I can't argue with your take.  My comment had to do with her dramatic exit from the business.  I might be a tad sensetive to partisan hackery.  Such is life.

Fri, 12/02/2011 - 11:36 | 1938561 dark pools of soros
dark pools of soros's picture

The dems get their turn then the repubs get theirs again.. Corzine will be pardoned regardless whatever sentence he gets

Fri, 12/02/2011 - 09:27 | 1937924 AngryGerman
AngryGerman's picture

Russia

Fri, 12/02/2011 - 09:25 | 1937916 vegas
vegas's picture

OMG!! The Dukes are in Korea. Go get 'em Randolph & Mortimer.

 

http://vegasxau.blogspot.com

Fri, 12/02/2011 - 09:26 | 1937921 midtowng
midtowng's picture

Until about a year ago the BoK was talking trash about how they would never buy gold.

Talk about late to the party.

Fri, 12/02/2011 - 10:11 | 1938154 Smiddywesson
Smiddywesson's picture

Yes.  I believe the switch back to gold was cooked up by the Fed and the ECB, along with a few other core countries they see as necessary to their future trade.  As time went on, they have brought more central banks into the conspiracy.  That has left a lot of other countries like S Korea and Mexico to step up purchases and try to catch up.  The exclusion of S Korea comes as a real surprise to me, but that probably reflects that China was in on the game early and demanded that S Korea, a regional rival, be left out until it was too late to acquire cheap gold.

Another interesting point:

No details were given as to from where the sizeable tonnage of gold was bought in November – whether it be inter central bank or from refiners or bullion banks. Nor was information forthcoming as to whether the Bank of Korea is storing their gold reserves in the central bank in Seoul.

The secrecy as to where they purchase their gold is a common theme among central bankers.  You'd think, if the purchases were an innocent rebalancing of their reserves, that where they bought it was irrelevant and not at all sensitive, but they all refuse to reveal their sources.  That tells me that the source would reveal: a) That they are buying a lot more than they are telling us, and b) That the source of the gold would blow everyone's mind if it were known.

I've said on this site many times that the gold in NY and Ft. Knox must have been replaced by now because the people who control it have had the time and the printing press to do so.  Maybe it was never taken and never needed to be replaced.  Maybe the reason there have been no audits for so long is because there is MORE GOLD THAN IS SUPPOSED TO BE THERE and the gold Korea just bought came from the Fed, not the producers or the market. 

The dollar has been in trouble since the late 1960s.  The Fed has had almost 50 years to stack enough gold to provide at least some gold reserves to every major central bank in the world.  Knowing the dollar would some day fail, and pressure would be put on gold prices as central banks moved to stack adequate gold reserves, maybe the Fed put away enough gold to keep it king of the hill when the eventual crash occurred.

Fri, 12/02/2011 - 09:27 | 1937926 GeneMarchbanks
GeneMarchbanks's picture

South Korea being visited by jackals.

Fri, 12/02/2011 - 09:31 | 1937930 PaperBear
PaperBear's picture

KABOOM, another shot is fired in the currency war.

This currency war isn’t going to kind to the lovers of paper.

Fri, 12/02/2011 - 09:53 | 1938054 scatterbrains
scatterbrains's picture

I agree and these incremental purchases of gold by sovereigns suggests to me that a slow steady pace of purchases will continue over many years (generations) as even if the CB's pull off a soft landing it is now apparent to all that the fiat game is a rigged ponzi.. everyone is now slowly backing up into their corners from it.

Fri, 12/02/2011 - 10:22 | 1938215 Smiddywesson
Smiddywesson's picture

I agree and these incremental purchases of gold by sovereigns suggests to me that a slow steady pace of purchases will continue over many years (generations) as even if the CB's pull off a soft landing

My worst nightmare is they drag this out for years, however we see signs of an acceleration into the collapse.  Derivatives and leverage got us into this mess, and the total global derivatives leaped up 15% to $707trillion in the last 6 months.  Russia, and now China, are threatening war over Iran, which is another way of saying Iran has WWIII in its competent hands.  Everyone is worried we or Israel will do a false flag.  Has anyone considered that Iran might attack itself?  Europe just received a bail out that didn't work, cannot work, and failed bond sales are the new normal. 

I can't see this ending with a soft landing.  TPTB are using everything they have to avoid a collapse, and still the world is reeling.

Fri, 12/02/2011 - 13:44 | 1939177 MJ
MJ's picture

"Has anyone considered that Iran might attack itself?"

To start a war it can't win?  It's foolish.  Iran wants a nuke so it can sit at the big boys table and not be invaded on a whim.  The question to ask would be does China and Russia really want Iran to have a nuke?  When you are part of the big boys club you usually don’t want other people to join you.  Likewise ‘support’ for Iran can only be a politically covenant position for that moment, and not actually a goal.

And there's already been one US 'false flag' trying to blame Iran.  That Texas car dealer trying to blow up consulates in Wash D.C.

If NATO decides to go in, China and Russia won't do anything in a military sense.  It's not worth their effort to fight for Iran, but it will make them move in a different way, counter in some way.  If they abstain from the UN Sec Council vote then it should be obvious they've also negotiated some gain with NATO, and, at the same time, didn't also want to deal with a nuclear Iran.

But I doubt that there will be a vote for action via the Security Council.  Russia and China should have learned its lesson on abstaining with Libya.  For there to be kinetic action against Iran it will either be NATO justifying going around the Sec Council, or it will be Israel acting in its 'defense' with NATO then coming in and providing support.

 

Fri, 12/02/2011 - 11:16 | 1938464 bernorange
Fri, 12/02/2011 - 09:29 | 1937932 fonzanoon
fonzanoon's picture

I know there is a lot of talk regarding gold confiscation and what happened with FDR. I was thinking. For people who own physical and think it could happen again...I think  it would be easier if they just nationalized Ishares etc. gold. It just seems to be a more profitable and easier route than possibly eating a shotgun slug trying to pry some guy's 2 eagles away from him at 2am.....just a thought.

Fri, 12/02/2011 - 09:32 | 1937945 Pladizow
Pladizow's picture

They can only nationalize what they know you have!

If you buy with cash?

Fri, 12/02/2011 - 09:33 | 1937947 MFL8240
MFL8240's picture

Zurich, Singapore, Frankfurt, Hong Kong, get your Gold out of here, this goverment is out of control.

Sat, 12/03/2011 - 12:27 | 1941503 Red Raspberry
Red Raspberry's picture

It needs to be in your possession.  Any where else is suspect. 

 

Fri, 12/02/2011 - 09:49 | 1938055 kralizec
kralizec's picture

I could see them going for the low hanging fruit first, as far as physical holdings, they could raid the big fish, us little fish would be harder to get from a manpower point of view, but hide your stash regardless!

Fri, 12/02/2011 - 10:33 | 1938270 Smiddywesson
Smiddywesson's picture

Agreed.  Anything is possible, and them going after the big fish is even probable, but I can't agree with a generalized confiscation.

Fri, 12/02/2011 - 10:52 | 1938257 Smiddywesson
Smiddywesson's picture

They didn't spend three years and trillions of dollars kicking the can to resort to openly stealing from you.  They could have done so in 2007.  TPTB prefer to steal on the sly through taxation, which the rich can easily avoid, not so with confiscation.  Also, this time around, there is no gold federal coinage to retreive, and regional banks don't have any gold, so there is no motivation for confiscation.  Kicking the can allows central banks and the people in China and India to buy gold.  When those three groups have enough, they can stop kicking the can and your and my paultry stack won't matter any more, what will matter is the populations of the West will be broke, and the living standards of West and East will be close enough to parity to establish a more balanced trading system. 

Fri, 12/02/2011 - 09:29 | 1937933 youngman
youngman's picture

Smart move.....they are not the only ones either...Colombia is too....these up and comers are seeing the light...the paper money that TPTB keep printing and printing and printing..is not where to stick it....sit on the sidelines and see in 5 years who comes out the winner...Gold will be the Coach whoever the player is..

Fri, 12/02/2011 - 09:30 | 1937934 MFL8240
MFL8240's picture

Not money ask Bernanke, they are fools should buy USD or Treasuries. lol!

Fri, 12/02/2011 - 09:44 | 1938029 Platinum_Investor
Platinum_Investor's picture

Congrats to Korea!

Fri, 12/02/2011 - 09:49 | 1938048 PaperBear
PaperBear's picture

Euro Central Banks May Provide $270B Through IMF to Fight Debt Crisis

www.bloomberg.com/news/2011-12-02/euro-region-s-central-banks-seen-providing-up-to-270-billion-through-imf.html

More debt to ‘fight’ the debt crisis ?

Privatising profits and socialising losses ? The generations not yet born will say thank you when they come into this world and are already on the hook for their share of all this debt.

A new ‘crisis-containment’ tool ? How about the tried and tested tool of old, BANKRUPTCY ? I could not read any more of this rubbish.

Fri, 12/02/2011 - 10:35 | 1938279 Smiddywesson
Smiddywesson's picture

The IMF is a black hole, sucking up the whole world.  DSK wasn't on board, he just wanted to get laid and run for president, so they ditched him for someone with real ambition and who could take orders.

Fri, 12/02/2011 - 09:51 | 1938062 Long-John-Silver
Long-John-Silver's picture

GOLD Bitchez! Just because no one else said it.

Fri, 12/02/2011 - 09:52 | 1938074 chaartist
chaartist's picture

what a surprise, smaller the country bigger the effort to go into gold

Fri, 12/02/2011 - 09:58 | 1938105 Minoan
Minoan's picture

During the 1997 crisis,the won lost 1/3 of its value against the dollar.Since then they buy dollars and now gold.

Fri, 12/02/2011 - 09:53 | 1938079 Parisnights
Parisnights's picture

We were frtunate to have our silve coins rung up as Knives.  Now th feds will think we are knife collectors instead of coin and bullion collectors.. Silver bitchez!

 

Fri, 12/02/2011 - 09:57 | 1938101 Clint Liquor
Clint Liquor's picture

BOK bought 15 tonnes? Now you know why Gold took a big hit in November, it was buying that caused it. (sarc)

Fri, 12/02/2011 - 10:06 | 1938133 youngman
youngman's picture

Suprises me too....all these people and entities buying...but the price is flat more or less....has me baffled...

Fri, 12/02/2011 - 10:47 | 1938313 Smiddywesson
Smiddywesson's picture

LOL, too funny.

Riddle me this, when is a better time to buy straw hats, in December or July?  The Fed knows this, and the Fed or the IMF are the only entities big enough to buy up enough gold in the past to satisfy today's demand.  That's why they won't reveal the most inocuous fact about these purchases, that the gold is coming from the NY Fed and Ft. Knox in a decade long plan to lay away tradition for a rainy day.  They stopped those audits for a reason, and the reason wasn't because there was no gold left.  The reason was there was enough gold stockpiled to kickstart the world's next monetary system, provided of course that you sign on to leaving the Fed on top.

Prices are muted because of manipulation in the gold and silver markets, but they are also muted because the gold central banks are buying came out of the market years ago.  That's why, with virtually unlimited ability to suppress gold prices, the price of gold was allowed to rise over the last decade.  The Fed was the buyer.  Gold isn't parabolic now because rules of supply and demand don't work if the two exist in different time frames.

Fri, 12/02/2011 - 10:09 | 1938142 Fred123
Fred123's picture

So with all this 'massive' gold buying by all central banks, why is the price still below its high by a couple of hundred bucks?

Fri, 12/02/2011 - 10:27 | 1938242 americanspirit
americanspirit's picture

It would be nice to know if private citizens in South Korea are permitted to own gold and silver and if so, how much are they buying? Since gold in private hands can, at any point, become gold in the government's hands, the real tonnage "owned" by South Korea (and plenty of other countries) is the actual National Gold Reserves figure.

I mean, does anyone believe that all that gold that Chinese citizens are now being 'allowed' to buy is going to stay in their hands for an indefinite time? Allowing your citizens to own gold is just a cheap back-door way for increasing National Reserves when the time comes. That's what the secret police and military are for, isn't it?

You have been warned, and not just once. Leave no trail, keep your mouth shut, and bury it deep and shielded.

"Just because you're paranoid doesn't mean you're not being followed." H. L. Mencken

Fri, 12/02/2011 - 10:50 | 1938331 Smiddywesson
Smiddywesson's picture

shielded?  Details please.

Fri, 12/02/2011 - 11:33 | 1938545 prole
prole's picture

Are private South Korean citizens allowed to own the precious? YES.

Do they own boatloads of it like Chinese and Indians? YES.  (OK slight exaggeration) But they have had relatively recent wars and occupations (ongoing lol) and they get the concept that paper currencies are a scam. They also can closely observe Orwellian North Korea with official currency devaluations every 10 to 20 years. (on top of that economy and currency being a joke in the first place)

Do ZHers know that Korea had its own 1933 moment in 1997 Asian financial crisis when the government called in the people's gold, for reasons which are too complicated for me to understand, but evidently to save the economy of SK?

It basically only applied to the rich, and if and how much you surrendered was voluntary, but it worked and perhaps due to Korean patriotism/solidarity, people lined up and turned in the precious, the won and the economy of SK was evidently saved. Or .gov insiders private vaults were enriched who knows?

Fascinating event and deserves to be studied by someone more qualified than poor me. (every Korean knows about it and you can ask your Korean friends about the event)

 

Fri, 12/02/2011 - 11:35 | 1938553 Watson
Watson's picture

I recall that when Korea had some problems in the 1990's the citizens queued up to *give* their gold to the Government to help the situation.

Yes, I thought it pretty strange too, but the reports did look convincing.

If true, it showed a degree of social cohesion difficult to imagine in the West.

Fri, 12/02/2011 - 11:07 | 1938423 Bansters-in-my-...
Bansters-in-my- feces's picture

So this explains why the price of gold is dropping.

You know,the supply and demand thing...../Sarc

Fri, 12/02/2011 - 11:37 | 1938564 WhiteNight123129
WhiteNight123129's picture

Well soon enought Equity Portfolio Manager will compare themselves with other funds excluding the gain that the other fund made in Gold. So if Special situation guys are "Fed up" and they went in Gold, their performance will be measured excluding the gain in Gold holding, because it is passive, it does not require analysis or it is somewhat "cheating"...

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