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(Kitco News) South Koreans can buy gold out of vending machines placed at convenience stores, and sales are surging, according to local media.
The buyers are embracing the easiness of buying gold bars at vending machines, citing value appreciation and inflation concerns, UPI News Korea.
In the nine months that ended in May, $19 million worth of gold bar sales were reported, said GS Retail, the company that operates the convenience stores.
The gold dispensing vending machines were introduced at five of their stores back in September. Since then, this was expanded to 29 stores, with plans to reach 50 by the end of this year. Overall, GS Retail oversees more than 10,000 convenience stores across South Korea.
The vending machines offer five weight options ranging between 0.13 and 1.3 ounces. The most popular gold bar has been the smallest one, which goes for around $225, the media report noted. The gold prices are updated daily, based on the international gold price.
"People in their 20s and 30s appear to be the main buyers, purchasing physical gold as an investment vehicle, especially in times such as these, when its value is continuing to rise," a GS Retail representative told UPI News Korea.
With inflationary pressures and the banking turmoil in the U.S. weighing on consumers, more people in Korea started stocking up on gold, said Inha University Professor Lee Eun-hee.
"But a gold bar purchased at a convenience store seems more like something done for fun than as a means for serious investment. I believe the popularity of these gold bars is mainly due to their easy accessibility, at convenience stores no less," she said.
South Korea is not the first country to introduce this type of shopping experience, with the UAE selling gold via the Gold To Go vending machine.
Despite the domestic popularity of gold, South Korea's central bank has embraced a more "cautious" approach to gold buying, preferring the liquidity of the U.S. dollars.
In a June report, the BOK said it maintains its U.S. dollar liquidity at times of high recession risks and geopolitical uncertainty, adding that it is still worried about the direction of gold prices.
"A cautious approach is necessary for determining whether to increase the ratio of gold in the foreign exchange reserves," the BOK said.
The central bank also noted that gold has already rallied quite a bit and could be close to peaking. More gold negatives were high interest rates and the difficulty of selling for liquidity purposes.
At the end of May, the central bank held 104.4 tons of gold in its foreign exchange reserves, worth around $4.8 billion and accounting for 1.14% of its total reserves.
The BOK has not bought any additional gold since the early 2010s. At the time, the central bank received heavy criticism after buying at a price peak.
Between 2011 and 2013, the BOK purchased 90 tonnes of gold. At the time, gold peaked at just above $1,920 an ounce. Following years of much lower prices, gold was able to recover above those levels only in 2020. At the time of writing, spot gold was trading at $1,963.20 an ounce.
"The main reason that the BOK hasn't increased its gold holdings since 2014 was because the price of gold had fallen further and remained at a low level," BOK Governor Rhee Chang-yong said during a National Assembly session early this year. "While the price of gold is beginning to pick up this year, I think it's more desirable to hold assets that yield interest rates, rather than increasing holdings of gold that are highly volatile in price."
