Korea Feals Pressure to Add Gold to Foreign Exchange Reserves

According to BNP Paribas Asset Management, the Bank of Korea which has yet to start buying gold is under enormous pressure to start adding gold to its foreign exchange reserves.

The increase in pressure comes from other countries like India, Russia, and China who have bought gold as a defense for currencies reserves. Last year the head of Korea's reserve management unit though gold to be of little value though with uncertain times increasing for financial markets that opinion is changing fast. Currently, Korea is 56th on gold holdings in the work according to World Gold Council.

As signs of a financial recovery are looking more bleak, gold prices are continuing to stay strong near their record high. With falling prices in both the dollar and euro there are not many options for Korea that are not adding physical gold to their foreign exchange reserves.

On August 26th gold traded for $1,239.70 and is up for looks to be its 10 year in a row.

South Korea is the 6th largest foreign exchange reserve in thw world with only 0.03% of their $286 billion in gold. China, Japan, Russia, Taiwan, and India are the top 5 foreign exchange reserves in order. Estimates are that Korea's' gold position is the smallest percentage of any of the top 100 foreign exchange reserve holders.

With fears surfacing of a double dip recession, Goldman Sachs forecasted that gold may exceed $1,300 with in the next 6 months.

Other foreign exchange reserves like Russia added 50000 ounces of gold in the last month increasing their total to 23.3 million ounces.

The euro has lost 12% of its value to the dollar in 2010 which is another set of economic news sending investors and countries to gold. Gold coins have been used in theory as a safe haven as they have never had a value of zero.