KRX sees gold trading double on tax benefit

The Korea Exchange, an exchange operator where securities, derivatives and commodities are traded, said Sunday its daily average of gold transactions had doubled this year as investors sought safe assets and a tax benefit took hold in January.

The KRX has been trading on average of 93.6 kilograms of gold per day on its spot market from January until June 11, up 114.8 percent from the 2019 average at 43.6 kilograms. At the same time, the spot gold price on the KRX surged 18 percent.

Besides investors’ flight to safety amid the coronavirus pandemic, the rise in gold transaction is attributable to the tax benefits to the gold investors in the KRX, the market operator said.

Those trading gold on the KRX’s spot market will be exempt from capital gains tax and value-added tax in case the investor gains a return. This shows a sharp contrast with investors in other gold-related instruments, such as gold-backed exchange-traded funds, where they are levied 15.4 percent of dividend income tax for profit-making, according to the KRX.

Any investor with a separate account created in one of the 10 securities brokerage houses in Korea is able to invest in gold bullion through home trading system platforms. The gold traders on the KRX can convert gold spot contracts into physical gold bullion within two business days at a branch of the brokerage firm.

Two types of gold bullion are tradable on the KRX, Korea’s sole certified spot gold exchange by the government: a 1-kilogram gold bar and a 100-gram gold bar.

By Son Ji-hyoung (consnow@heraldcorp.com)