|The Bank of Korea is stocking up on gold.|
We just bought 25 tons of gold . . . but everything is fine, nothing to worry about . . . move along, nothing to see here.
South Korea's central bank said Tuesday it bought gold for the first time in 13 years, diversifying its foreign exchange reserves away from the dollar.
The Bank of Korea said in a statement it bought 25 tons of gold from the global market between June and July, bringing its total gold reserves to 39.4 tonnes as of the end of July.
A brittle global economic recovery and precarious debt situations in the United States and Europe have boosted the safe-haven appeal of gold, lifting bullion to a series of record highs in July, as investors and central banks chased prices higher.
The central bank of Asia's fourth-largest economy said that, with prices hovering near historic highs, gold looked less lucrative as an investment but it was the right time to buy gold because its foreign reserves had risen above $300 billion.
"The gold purchase, as a safety net, will help us cope with volatile global financial markets and enhance investor confidence in Korea in times of crises," Hong Taeg-Ki, head of the bank's reserve management group, told Dow Jones Newswires.
|The Bank of Korea just purchased 25 tons of gold. But|
they aren't worried. Everything is just fine.
"Any news about central banks buying gold reassures consumers and other major players who are already looking at gold as an investment," said Jeffrey Pritchard, analyst at California-based commodities futures and options brokerage Altavest Worldwide Trading.
The Bank of Korea said in a statement its latest gold purchase was valued at $1.24 billion. It did not say whether it had bought gold bullion or funds.
At 25 tons of gold, equivalent to 803,769 ounces, the average price paid comes to $1,543 an ounce, based on Reuters calculations.
A Bank of Korea official said it was the bank's first gold purchase since at least the 1997-1998 Asian financial crisis.
They had no comment on whether there would be more purchases.
It was the first time the bank has bought gold since it purchased the precious metal from Koreans during the 1997-1998 East Asian financial crisis.
Individuals at that time collected gold from their homes to help their country overcome the crisis.
Since the 2008 financial meltdown, gold has become increasingly attractive to central banks worldwide, and prices have risen sharply.
The central bank's total reserves were at a record high of $311.03 billion at the end of July.
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