[2025 Audit] "Why Didn't You Buy Gold?" Bipartisan Lawmakers Criticize... Rhee Changyong: "Will Review Structurally"

"It is difficult to purchase gold while foreign exchange reserves are declining"
"Over the past ten years since 2013, stock prices have increased more than gold"
"Asset allocation will be reconsidered if foreign exchange reserves expand"

On October 20, during the National Assembly's Strategy and Finance Committee audit of the Bank of Korea, lawmakers from both the ruling and opposition parties criticized the Bank for not actively purchasing gold, despite the recent surge in gold prices.

Bank of Korea Governor Rhee Changyong explained that until 2023, stock prices had outperformed gold, and that the country’s foreign exchange reserves had been on a declining trend over the past two to three years, making it difficult to purchase new assets. However, he stated that, considering the sustainability of high gold prices and the status of the US dollar as a safe asset, the Bank would structurally review the allocation of assets within its foreign exchange reserves once again.

Yonhap News Agency

The Bank of Korea has maintained its gold holdings at 104.4 tons since it last purchased an additional 20 tons in 2013. This accounts for about 1.2% of the country’s foreign exchange reserves, ranking 38th globally. In contrast, international gold prices have risen by 65% just this year. In response, lawmakers from both parties in the Strategy and Finance Committee urged the Bank to reconsider its stance on gold purchases. Ahn Dogeol, a lawmaker from the Democratic Party of Korea, pointed out, "As a small, open economy with a non-reserve currency, countries with economic structures similar to ours, such as Taiwan and Singapore, hold gold at levels equivalent to 5-7% of their foreign exchange reserves. If we had raised our holdings to 5%, our foreign reserves would have increased by 5 billion US dollars in simple arithmetic terms."

In response, Governor Rhee said, "I believe it was reasonable for the Bank of Korea not to purchase gold for ten years after stopping in 2013, as stock prices increased much more than gold during that period." He added, "I do understand the concern that we may have missed an opportunity, given the rapid rise in gold prices over the past three years. However, over the past three years, our foreign exchange reserves have been declining, so it was not easy to consider purchasing new assets."

He continued, "If we move into a phase of increasing our foreign exchange reserves, there will be room to reconsider asset allocation. Whether the recent high gold prices will be sustained is still under discussion. Since this is closely related to the status of the US dollar as a safe asset, we will structurally review the issue once again." However, when asked if there were any plans to increase gold holdings, Governor Rhee replied, "There are no such plans in the short term."