Gold ETF Investment Boom
Large-Scale Physical Purchases by Fund Managers Drive Import Surge
On the 18th, as gold prices soar and a shortage of gold bars occurs, a photo of gold bars is displayed on the exterior wall of the Korea Gold Exchange Jongno Main Branch in Jongno-gu, Seoul. 2025.2.18. Photo by Kang Jinhyung
This year, domestic gold imports have surged, reaching their highest level in 28 years.
According to the Ministry of Trade, Industry and Energy on December 10, gold imports from January to November this year totaled 7.33 billion dollars, a 211% increase compared to the previous year. This figure surpasses the previous record set in 1997 during the foreign exchange crisis, when the preference for safe assets peaked and gold imports reached 6.51 billion dollars.
The sharpest increase occurred in October and November. Gold imports in October soared by 803% year-on-year to 2.1 billion dollars, while November saw a 468% increase to 1.46 billion dollars. These two months accounted for half of this year’s total gold imports. During this period, Korea Gold Exchange (820 million dollars, up 1,152%) and Samsung Gold Exchange (340 million dollars, up 1,760%) led the expansion in import volumes.
The government identified the surge in gold ETF (Exchange-Traded Fund) investments as the main reason for the increase in gold imports. When individual investors increase their investments in gold ETFs, fund managers use more than 99% of the invested amount to purchase physical gold. Although there is no legal requirement to buy gold, if the gap between the physical gold price and the ETF’s total assets widens, there is a risk of delisting. Therefore, the government explained that the structure effectively forces the purchase of gold.
In fact, the total assets of leading gold ETFs have grown rapidly this year. The Ace Gold Spot ETF by Korea Investment Management expanded from 620 billion won in December 2024 to 3 trillion won by November this year. Similarly, the Tiger Gold Spot ETF by Mirae Asset, which was listed in June with assets of about 50 billion won, grew to 900 billion won by November. This massive inflow of funds into ETFs led to a surge in demand for physical gold purchases, which in turn drove up gold imports.
Another factor was the recent formation of a “premium” in domestic gold prices, where prices in Korea have been higher than those overseas. Some companies expanded gold imports to profit from arbitrage opportunities. However, the government maintains that increased demand for physical gold purchases by ETFs is the primary driver behind the recent surge in imports.
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