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Gold Investment Options Expand Beyond Physical Bullion in South Korea
For investors in South Korea, buying gold does not only mean purchasing physical gold bars. Available options include trading gold through the Korea Exchange (KRX) gold market, investing in gold exchange-traded funds (ETFs), using bank gold accounts, and buying physical gold bars. Investors can also combine some gold-related investments with tax-advantaged accounts such as Individual Savings Accounts (ISA) and retirement accounts.
The choice of method affects taxes, fees, storage arrangements and whether investors can take physical gold home.
KRX Gold Market Offers Exchange Trading Without Holding Physical Gold
The KRX gold market allows investors to buy and sell gold by the gram through securities firms, similar to stock trading. Accounts can be opened through participating brokers, with both in-person and online account opening available. Trading is conducted through platforms including home trading systems, mobile apps, phone services and branch visits.
The market trades 99.99% pure gold certified by the Korea Minting, Security Printing & ID Card Operating Corp. and the London Bullion Market Association (LBMA). The Korea Exchange manages trading, the Korea Securities Depository handles storage and withdrawals, and the Korea Minting, Security Printing & ID Card Operating Corp. manages quality certification and inspection.
KRX gold trading is available in 1-gram units, while a 100-gram mini gold product is also available. According to the Korea Exchange, profits from KRX gold trading are not subject to capital gains tax or dividend income tax, and are not included in comprehensive taxation on financial income. However, withdrawing physical gold from the account triggers a 10% value-added tax.
KRX gold is not protected by South Korea’s deposit insurance system, unlike bank deposits. Investors may also face losses from gold price movements and currency fluctuations.
Gold ETFs Provide Market Exposure Through Korean and Overseas Exchanges
South Korean investors can access gold ETFs listed domestically or overseas. Domestic products include ETFs that invest in gold futures as well as products linked to physical gold prices.
Examples include KODEX Gold Futures(H), which tracks a gold futures index and uses currency hedging, and TIGER KRX Gold Spot, which invests directly in gold-related assets and does not hedge currency movements. Taxes differ depending on the ETF structure. Domestic gold ETFs are generally subject to a 15.4% dividend income tax on investment gains.
Investors can also buy U.S.-listed gold ETFs such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU). Gains from overseas-listed gold ETFs are taxed differently in South Korea, with capital gains taxation applied after an annual 2.5 million won deduction and a separate 22% tax rate on the excess amount.
Gold Bank Accounts and Physical Gold Bars Remain Popular Alternatives
South Korean banks offer gold accounts, allowing customers to buy and sell gold without taking physical delivery. KB Kookmin Bank’s gold banking service allows transactions as small as 0.01 grams, with buying and selling prices adjusted by fees.
Gold account gains are classified as dividend income and are subject to a 15.4% withholding tax. Unlike physical gold purchases, buying gold through a bank account does not require paying the 10% value-added tax at the time of purchase. However, gold banking products are not covered by deposit insurance.
For investors who prefer physical ownership, South Korea’s banks sell government-certified gold bars in various sizes. Buyers pay a 10% value-added tax when purchasing gold bars, while selling them does not require the same tax. Physical gold gains are not subject to capital gains tax, but gold bars are also not protected by deposit insurance.
Tax-Advantaged Accounts Can Be Used With Some Gold Investments
South Korea’s ISA accounts can provide tax benefits for certain gold ETF investments. Gains up to 2 million won annually, or 4 million won for certain lower-income account holders, can receive tax benefits, with additional income subject to a separate 9.9% tax rate instead of comprehensive financial income taxation. However, ISA accounts must generally be held for three years to receive tax benefits, and overseas-listed ETFs such as GLD and IAU cannot be included.
Retirement savings accounts can also provide tax advantages for ETF distributions, which are taxed later when withdrawn as retirement income. Some gold futures ETFs may not be eligible for certain retirement accounts because of investment restrictions.
Investors Must Consider Fees, Taxes and Market Risks
Gold investments in South Korea vary significantly in structure. KRX gold trading offers exchange-based transactions with no tax on trading gains, while ETFs and gold accounts have different tax rules. Physical gold provides direct ownership but involves purchase taxes and storage concerns.
Financial institutions warn that gold products are not the same as bank deposits and can lose value. Investors may face losses from changes in gold prices as well as exchange-rate movements.
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