Core Viewpoint - The Bank of Korea (BOK) is signaling a potential shift towards increasing its gold reserves after a 12-year hiatus, amidst a global trend of central banks accumulating gold as a hedge against financial uncertainty [2][3]. Group 1: Current Status of Gold Reserves - The BOK has maintained its gold reserves at 104.4 tons since 2013, ranking 39th among global central banks [3]. - The BOK's ranking has declined from 32nd in 2013 to 39th, and potentially to 41st when including the IMF and ECB [3]. - A recent survey indicated that 95% of central banks expect an increase in gold reserves over the next 12 months, contrasting with the BOK's cautious stance [3]. Group 2: Reasons for Previous Inaction - The BOK refrained from purchasing gold due to higher returns from risk assets like stocks, with the S&P 500 rising 158% compared to gold's 71% increase over the same period [4]. - A decline in foreign exchange reserves from a peak of $469.2 billion in October 2021 to approximately $420 billion has limited the BOK's ability to diversify into gold [4]. - Past experiences of significant gold price volatility have contributed to a cautious approach, with gold prices dropping from $1,900 per ounce in 2011 to around $1,100 in 2015 [4]. Group 3: Potential Shift in Strategy - Market analysts warn that excessive caution may lead to missed opportunities, especially with predictions of rising gold prices due to potential interest rate cuts and a weakening dollar [7]. - The average gold price is forecasted to reach $4,450 per ounce next year, with a possibility of exceeding $4,800 by year-end [7]. - The BOK's gold reserves constitute only 2.8% of its foreign exchange reserves, significantly lower than Japan and China, indicating a lack of safe assets to buffer against economic uncertainties [7]. Group 4: Political and Market Pressure - There is increasing political pressure for the BOK to enhance its gold reserves, with calls to recognize gold as a strategic asset for maintaining monetary sovereignty [8]. - Emerging market central banks are actively buying gold during price dips, providing strong support for gold prices [8].