South Korea mint has supply limitations

South Korea’s state mint is dealing with a golden bar scarcity in the middle of a robust precious metal demand.

Korea Minting and Security Printing Corporation (Komsco), which is responsible for the production and distribution of several security products, Sales suspended from Gold Bars last month.

Komsco attributed the suspension to problems with the acquisition of raw materials, according to a Google translation of the notice on its website. The mint typically supplies bullion bars to commercial banks, stores and shopping centers online of Korea.

Expensive machines According to reports, in the capital of Seoul they were sold from gold bars to the size of a nail, according to Local mediaAs consumers rushed to buy the safe asset.

“The sudden increase in gold demand in South Korea has led Korean banks to temporarily suspend the sales of Golden Bars at Komsco’s request, since there are not enough gold bars in the country to meet local demand,” said Robin Tsui, APAC’s gold strategist in State Street Global Advisors.

The demand is being driven by retail investors, industry observers told CNBC, and many accumulate in the asset as a coverage against internal political agitation and concerns of economic and geopolitical uncertainty caused by the tariffs of the president of the United States, Donald Trump.

The president of South Korea, Yoon Suk Yeol, is waiting for a verdict of political trial after his short declaration of martial law on December 3.

Legislators also voted process The interim president, have Duck-Soo, at the end of last year, immersing the country in a renewed political turbulence. The second interim president of South Korea after Han, Choi Sang-Mok, has faced an opposition from the public about what they see as actions to hinder efforts to stop Yoon.

The domestic agitation of South Korea has corresponded to Trump’s return to the White House and, together with her, the possibility of a growing commercial war.

The proven Gold coverage against the depreciation of the local currency has led to a greater demand in the midst of a “rapid depreciation” of Korean gain, especially in the last quarter of 2024, said Ray Jia, a research chief at the Gold Council World Cup.

The investment in bars and coins in South Korea increased 29% in the fourth quarter of last year to 5.9 tons, according to the data provided by the Gold Council World Cup, which coincided with a depreciation of 11% of the Korean won against the US dollar during the time, showed the LSE data.

Meanwhile, market observers told CNBC that the South Korean capital market had not been too exciting for local investors.

“If you are worried about the devaluation of your currency, it changes to gold. If you have no confidence in your stock market, you will change to gold,” said Bernard Dahdah, a precious metal analyst in Natixis.

While the South Korean reference, Kospi has registered a 2% rise since December 3, the index saw an exodus of 224.88 billion Won ($ 155.9 million) among individual investors between December 3 and March 5, according to Stock Exchange data. This contrasts with a 10% gain in spot gold prices during the same period.

“Gold’s superior returns on national actions have promoted more gold demand,” said Tsui of State Street Global Advisors.

The strong demand for gold in the United States in recent months has been redirect bullion outside several countries As merchants try to store it in preparation for Trump tariffs on Canada and Mexico.

“There are regional gold scarcity, directed by London but now also South Korea, because metal goes to the United States and, therefore, there is less supply in those markets,” said MKS Pamp Strategy Head, Nicky Shiels.

A complicating factor is that merchants who hope to move gold to the US Comex deposits. Make a large extent deliveries through kilograms barswhich are generally available only in regions selected in Asia and the Middle East.

“The Korean refineries and wholesalers probably received a phone call and said:” We will buy all their action from a good premium, we will hit it on a plane and send it to New York, “said the strategist of the World Market Market for Asia and Europe, John Reade.

In addition, a higher incentive to produce the biggest kilobars than typically accepted by ComexEs of Comex can be taking refineries to change to produce these larger bars for shipping, Tsui said.