South Korea hastens central bank gold-buying spree

Section:

Central banks aren't usually in the jewelry business, so they must think that it's ... money.

* * *

By Yoo Choonsik and Rujun Shen
Reuters
Friday, December 2, 2011

http://af.reuters.com/article/commoditiesNews/idAFL4E7N20BH20111202

South Korea's central bank said on Friday it bought gold in November for the second time this year to diversify its foreign reserves, joining its counterparts in other countries in seeking protection against financial instability and inflation.

Central banks around the world, especially in emerging economies, have accelerated gold purchases in recent months, driving up the total official sector gold purchase in the third quarter by more than double to 148.4 tonnes, according to the World Gold Council.

"We bought the gold as part of our diversification strategy and based on long-term investment considerations," Lee Jung, an official at the bank's reserve management group, told reporters.

The Bank of Korea bought 15 tonnes of gold for $850 million in November, after buying 25 tonnes for $1.24 billion between June and July in its first gold purchase in more than a decade, bringing total gold ownership to 54.4 tonnes.

The central bank of Asia's fourth-largest economy still holds only a small proportion of its more than $300 billion reserves in gold, but gold now accounts for 0.7 percent of total reserves, up from just 0.026 percent in June.

... Dispatch continues below ...



ADVERTISEMENT

Be Part of a Chance to Discover
Multi-Million-Ounce Gold and Silver Deposits in Canada

Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada.

Check out the exploration program on our Allco gold/silver project :

-- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit.

-- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries.

-- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited.

To learn more about the Allco property or Northaven's other gold and silver projects, please visit:

http://www.northavenresources.com

Or call Northaven CEO Allen Leschert at 604-696-3600.



Lee declined to say if the Bank of Korea intended boost gold holdings but added its efforts to diversify away from dollars and securities was a long-term strategy.

Reuters calculations show the Bank of Korea paid about $1,750 per ounce on average for the purchase, compared with an average spot price of about $1,740 for the month.

Central banks in countries from Russia and Thailand to Mexico and Colombia have been boosting gold holdings as doubts grew about the stability of the U.S. dollar as the world's top reserve currency and with inflation expected to remain high.

"Emerging economies including Russia and China have been adding their gold reserves, as the situation in the United States and Europe is not looking great," said Hou Xinqiang, an analyst at Jinrui Futures in China.

"Growing appetite for gold from central banks will surely support gold prices to further rally in the next few years, and gold is gaining an increasingly prominent status on central banks' books."

Central banks became net gold buyers in 2010 for the first time in two decades and have remained net purchasers this year, even as spot gold prices have climbed more than 20 percent.

The total net purchase of the official sector in the first three quarters of the year stood at 348.7 tonnes, compared to last year's total of 77 tonnes, according to the World Gold Council.

"While the bulk of central bank gold is still held in North America and Europe, a build-up of gold reserves in emerging markets has been a consistent feature over the last few years," said the council in a research report published recently.

South Korea's foreign reserves including gold fell to $308.63 billion by the end of November from $310.98 billion a month before, due to declines in non-dollar currencies such as the euro, the Bank of Korea said.

It held 90.5 percent of its reserves in securities such as government bonds, it said.

* * *

Join GATA here:

Vancouver Resource Investment Conference
Sunday-Monday, January 22-23, 2012
Vancouver Convention Centre West
Vancouver, British Columbia, Canada

http://cambridgehouse.com/conference-details/vancouver-resource-investme...

California Investment Conference
Saturday-Sunday, February 11-12, 2012
Hyatt Grand Champions Resort
Indian Wells, California, USA

http://cambridgehouse.com/conference-details/california-investment-confe...

Support GATA by purchasing a silver commemorative coin:

https://www.amsterdamgold.eu/gata/index.asp?BiD=12

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

http://www.goldrush21.com/

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

The United States Once Again Can Establish
a Stable Dollar Worth Its Weight in Gold

Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, has released a plan to restore economic growth through a stable dollar.

The plan, titled "The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies," responds to the recurrent economic crises of the last century and outlines a detailed proposal for America's leadership on "how we get from here to there." That is, how we get from the present unstable paper dollar to a stable dollar as good as gold.

James Grant, author and editor of Grant's Interest Rate Observer, says of the Lehrman plan: "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman the country has finally found him."

To learn more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit:

http://www.thegoldstandardnow.org/gata