Bloomberg — On a busy street in the wealthy Gangnam district of Seoul, there is a store that offers the usual: magazines, toilet paper and an abundant assortment of drinks. But next to the cash register is a vending machine that offers a much more surprising product: gold.
This machine from the GS Retail Co. store. sells gold bars ranging from 37.5 grams (1.32 ounces) to less than 1 gram.
This is how you can buy gold bars from vending machines in South KoreaThe ingots sold in these machines have different sizes and their price is set according to their daily movement in the market. Photographer: Jaehyun Eom/Bloomberg
The Prices change every day according to market movementsbut they start at about 88,000 won (US$64) for a 0.5 gram (0.0176 ounce) bar.
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These machines are present in thirty company franchise stores throughout the country, a number six times greater than the number that began service in 2022.
“We are currently recording sales worth approximately 30 million won (US$21,958) per month,” a GS spokesperson said via text message. “The gold vending machine captures the attention of consumers thanks to the increasing demand for safe-haven assets and the increasingly widespread trend of micro-investment.”
South Korean residents They are caught up in the micro-investing trend that is spreading throughout the world. In the United Kingdom, 65% of Generation Z and millennials are open to investing in fractional shares (less than one share of a company), according to a May 16 report from Charles Schwab Corp.
Retail investors around the world have been flocking to everything from meme stocks to cryptocurrencies; For South Koreans, physical gold is just another option.
Local investors are “afraid of missing out when everything recovers, and that partly contributed to this situation,” he says. Park Sang-hyun, economist at HI Investment & Securities in Seoul, highlighting the recent rise in the price of gold market at an all-time high of more than $2,400 an ounce last month . “The sense of uncertainty about the global economy drives demand for safe havens,” he adds.
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This is how you can buy gold bars from vending machines in South KoreaA gold bar vending machine in Seoul’s Gangnam neighborhood awaits customers. Photographer: Jaehyun Eom/Bloomberg
The thrill of gold in convenience stores
GS is not the only convenience store chain taking advantage of the allure of gold in South Korea.
The rival company CU began to sell three types of ultra-light gold cards April 1. The 1-gram cards took just two days to sell out, according to BGF Retail Co., the company that runs the chain, with most of the demand coming from customers in their 30s.
According to a BGF spokesperson, 95% of the 770 gold products on offer were sold as of May 31. “Sales accelerated as CU’s fixed-price gold products became cheaper than the market price,” BGF said in a press release.
The retail chain will introduce heavier weight options, from 2 gram (0.070 ounce) to 10 gram (0.352 ounce) bars in the future, but did not specify a date.
The trend of selling gold alongside bathroom essentials and soft drinks has also caught the attention of Americans.
Last summer, US-based Costco Wholesale Corp. began offering gold bars; Now, even with a limit of two per customer, 1-ounce bars whose cost is based on market price sell out within hours.
In Korea, online banks are also trying to meet the demand for gold.
Kbank, one of South Korea’s three Internet banks with more than 10 million users, launched a service on May 9 that allows your app users to buy bullion gold from 1.875 grams (0.066 ounces) to 37.5 grams (1.322 ounces) with free delivery.
“With the price of gold recently exceeding $2,400 per ounce, investing in gold has become popular,” the bank said in a statement, adding that it plans to expand the service to gold and silver coins by the end of the year.
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The rise of micro gold leaves the Bank of Korea cold
One entity that is not willing to start installing gold bullion vending machines is the Bank of Korea (BOK).
The country’s central bank has not bought metal since 2013. By the end of 2023, it had 104.4 tons of gold, according to a report by Yonhap news agency. Meanwhile, in the first quarter of 2024, South Korean consumer demand for bullion rose 16% from a year earlier, to 8.6 tonnes.
This is how you can buy gold bars from vending machines in South KoreaBank of Korea complex in Seoul has not been attracted by the purchase of gold that it has not made since 2013. Photographer: Woohae Cho/Bloomberg(Bloomberg/Woohae Cho)
Likewise, “the record price of gold fueled investor interest in South Korea,” the World Gold Council wrote in its quarterly report, noting that the The country’s bullion demand in the first quarter of 2024 increased by 27% Over the previous year. “This represented the strongest quarter for South Korean investment in more than two years,” he added.
“Gold is not as useful as traditional assets like bonds and stocks in terms of managing within a pool of foreign exchange reserves,” he wrote. Wanho Choi, head of reserve management planning at the bank, in a blog post to explain the bank’s stance.
“The bank has not purchased gold since 2013, which sparked some criticism that the BOK was missing an investment opportunity,” Choi added on the bank’s official blog. “It is not easy for central banks to sell gold for liquidity purposes due to the reputational risk once purchased, so the investment decision requires careful consideration of many factors.”
“Retail investors who put their money into assets like U.S. Treasuries and Japanese yen last year didn’t get the returns they wanted,” he notes. Seokhyun Paik, Shinhan Bank economist. “Then they turned their attention to gold.”
Read more at Bloomberg.com
