Low Fees and Tax-Free Capital Gains... Popularity of the KRX Gold Market

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[Asia Economy Reporter Minwoo Lee] As gold trading volume increases every year, the Korea Exchange's 'KRX Gold Market,' a nationally certified gold trading market, is gaining attention for its low fees and easy trading methods.

According to the Korea Exchange on the 22nd, the average daily trading volume of the KRX Gold Market this month as of the previous day is 92.9 kilograms (kg). This is an increase of 113.5% compared to 43.6 kg last year. Since its initial opening in 2014 with 5.6 kg, it has steadily grown by around 100% annually. Gold prices are also on the rise. According to financial information company Tenpo, as of the previous day, the price per 1 troy ounce (approximately 31g) was $1,738.29, up 14.9% compared to the end of last year. Based on the KRX Gold Market, the price per gram was 69,200 KRW as of the previous day, up 22.4% compared to the end of last year.

With investment sentiment focused on gold, the KRX Gold Market, the only nationally certified gold market in Korea, is attracting attention. The Korea Exchange, with approval from the Financial Services Commission, established the 'KRX Gold Market' in March 2014 as the only nationally certified gold spot market in Korea. After opening a gold trading account with a securities company, investors can trade 1kg or 100g gold bars on the KRX and invest in units of 1g like stocks. However, when withdrawing physical gold, it must be done in units of 1kg or 100g depending on the product. When physically withdrawing, a 10% value-added tax and a physical withdrawal fee (around 20,000 KRW per item) are charged. Typically, investors aiming for capital gains do not withdraw physical gold.

The main feature of the KRX Gold Market is its stability. It trades high-quality gold with 99.99% purity certified by the Korea Minting and Security Printing Corporation and securely stores it at the Korea Securities Depository. Compared to physical trading through gold shops, bank gold banking, or bank gold trusts, it is considered a cheaper investment method. The KRX Gold Market price is about 100.2~100.3% of the international gold price, which is the transaction reference price for gold producers and importers. This means general investors can trade at nearly wholesale prices. When trading using securities companies' Home Trading Systems (HTS), a fee of around 0.2% is charged, which is the lowest compared to bank gold banking (1%) and bank gold trusts (0.8%).

Another advantage unique to the KRX Gold Market is tax exemption on capital gains. Capital gains from gold banking and gold exchange-traded funds (ETFs) are taxed as dividend income, with 15.4% withholding tax on gains. In the case of the KRX Gold Market, capital gains are tax-exempt, so it is naturally not subject to comprehensive financial income taxation. It also has the lowest physical withdrawal fees compared to bank gold banking and others.

An exchange official emphasized, "The KRX Gold Market is the only nationally certified gold market where investors can enjoy tax exemption benefits at the lowest cost," adding, "It is the most efficient market for investors expecting capital gains from rising gold prices and those who want to withdraw physical gold."

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