Full Suspension of Sales from October 20
Gold and Silver Prices Surge Together
Boom in Physical Investment Demand
As international silver prices hit an all-time high, a supply crunch for silver bars has emerged in South Korea. The Korea Gold Exchange has notified major commercial banks that it will halt the supply of silver products, prompting banks to either suspend or plan to suspend silver bar sales.
An official at the Korea Gold Exchange Jongno Main Branch is showing a silver bar. Photo by Yonhap News
According to industry sources on October 18, the Korea Gold Exchange has informed major commercial banks, including KB Kookmin Bank, Woori Bank, NH Nonghyup Bank, and Shinhan Bank, that it will suspend the supply of silver bars from October 20 until January 1 next year. As a result, it is expected to become difficult to purchase silver products at most banks, except for Hana Bank. Some banks that have already run out of stock had suspended sales even earlier.
A banking sector official explained, "As silver prices have risen sharply in recent days, demand for physical investment has surged," adding, "The timing for resuming sales is still undecided and will depend on supply and demand conditions."
In fact, international silver prices have been climbing steadily, causing a stir in the market. On October 16 (local time), the December silver futures contract traded on the New York Commodity Exchange (COMEX) soared to as high as $52.8 per troy ounce, setting a new all-time record. This surpasses the previous peak during the 'Hunt Brothers Silver Crisis' in the early 1980s.
Gold prices have also continued their upward trajectory. On the same day, international gold prices reached an intraday high of $4,254.8, marking a new record. As a result, the supply of gold bars has also been disrupted.
The Korea Mint Corporation announced that it will temporarily suspend the supply of all gold bar products from this month until January 1 next year. Some banks that previously handled products from the Mint Corporation have already halted sales, and now only products from certain private exchanges, such as the Korea Gold Exchange and LS MNM, are being distributed on a limited basis.
The simultaneous surge in gold and silver prices is attributed to a combination of increased demand for safe-haven assets and heightened expectations for liquidity. The possibility of an interest rate cut by the US Federal Reserve and concerns over a global economic slowdown have driven investment demand toward physical assets.
Experts are particularly focusing on the potential for further increases in silver prices. In a recent report, Daishin Securities stated, "Silver is an asset that responds more sensitively to changes in liquidity than gold," and added, "Given its lower price and strong upward momentum, now is the time to consider increasing the proportion of silver in investment portfolios."
According to the report, silver typically tends to rise about a year and a half after an interest rate cut. In periods of active liquidity supply, silver prices can climb even more steeply than gold. However, the report also pointed out that due to the high volatility of silver prices, risk management is crucial.
With domestic demand for physical silver surging and silver bar shortages recurring, concerns are mounting that if international prices do not stabilize, the supply suspension could be prolonged.
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