Trump Delays Tariffs on Canada and Mexico by 30 Days
Rising Fears of a Trade War Boost Demand for Safe Assets
Various Gold Investment Methods, Including Gold ETFs, Gain Attention
As investors' preference for safe assets strengthens, gold investment (Gold + Finance) is gaining popularity. The tariff threats from U.S. President Donald Trump and the turmoil caused by the domestic impeachment crisis have intensified, leading to expectations that gold prices will rise again this year following last year, fueling the gold investment atmosphere.
Gold Prices Surge Amid Trump's Tariff Pressure
According to the Korea Exchange (KRX) on the 7th, as of 11 a.m., the price of gold spot per gram was 146,590 won, up 0.34% from the previous day (146,100 won). Gold prices have continued their upward trend, trading above 140,000 won this month after surpassing 130,000 won on the 24th of last month.
The preference for gold among investors is due to growing concerns over a trade war triggered by President Trump's tariff threats. Previously, President Trump decided to delay the imposition of a 25% tariff on imports from Canada and Mexico for 30 days. Since the tariff delay is temporary and President Trump has emphasized his intention to impose tariffs on certain industries such as semiconductors, steel, and oil & gas, the trade war concerns remain ongoing.
With increasing domestic and international uncertainties, the dominant view is that gold prices will rise again this year following last year. The Wall Street Journal (WSJ) reported that major Wall Street investment banks such as JP Morgan and Citigroup have set a gold price target of $3,000 per ounce by 2025. Bart Melek, Chief Commodity Strategist at Canada's TD Securities, said, "The market is not fully confident about the scale of the trade war," adding, "If this trade war continues for a considerable period, there is a high possibility that gold prices will rise significantly."
Although the outlook for rising gold prices is prevailing, some caution against gold investment. Since prices have already risen significantly, the potential for further gains may be limited, and if the pace of interest rate cuts is adjusted realistically, gold demand could shrink.
From Gold Bars to ETFs... Various 'Gold Investment' Methods Draw Attention
On the morning of the 4th, an employee is organizing gold products at the Korea Gold Exchange in Jongno-gu, Seoul. Photo by Yonhap News
In South Korea, where political turmoil overlaps, gold investment is becoming increasingly popular. Methods of investing in gold include ▲gold bars (physical gold) ▲gold accounts ▲gold ETFs (exchange-traded funds).
The most traditional investment method is purchasing gold bars directly. Gold bars can be bought in units such as 10g, 100g, and 1kg at jewelry stores or banks. However, when purchasing gold bars, a 10% value-added tax is applied, and although it varies by exchange, typically a 3-5% processing fee is charged. Therefore, gold prices need to rise by more than 15% to make a profit. The risk of theft is a downside, requiring a safe or secure place for storage.
To reduce these burdens, gold accounts have emerged. Known as "Gold Banking," gold accounts work by depositing money into an account, and the bank converts the deposit amount into gold weight based on international prices and credits it. Investors can invest in small amounts from 0.01g and do not need to store gold separately. However, when selling gold and receiving cash, a dividend income tax of 15.4% must be paid on the capital gains.
There are also gold ETFs that allow buying and selling gold like stocks. These funds track gold prices, and with just a securities account, investors can easily invest in gold. Trading is convenient and real-time, but ETFs do not perfectly track gold prices 100%. Additionally, like other financial products, a 15.4% dividend income tax is imposed. Besides these, investment methods using the Korea Exchange (KRX) gold market are available. Unlike other investment tools, this method offers tax exemption on capital gains.
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