The domestic gold market is rapidly converging. With the Korea Standard Gold Exchange, the third-largest distributor, temporarily suspending all gold product sales starting at 3:00 PM on October 14th, trading demand from individual and institutional investors is naturally shifting to the Korea Gold Exchange and the Korea Exchange (KRX) gold market.
This measure is not simply a temporary suspension of sales, but rather an incident that exposes the structural limitations of the physical gold distribution network. With the overlapping disruption of raw material supply and a surge in orders, investors flocked to the Korea Gold Exchange, which boasts a stable supply chain.
The Korea Gold Exchange, which accounts for approximately 60% of domestic gold circulation, is a vertically integrated gold company with its own refining and import infrastructure and a nationwide distribution network. It is considered one of the few companies capable of immediately securing alternative supplies even in the event of supply chain disruptions. Indeed, demand for physical gold has surged in recent days, leading to extreme congestion in stores.
A Korea Gold Exchange official said, "These days, customers flock to our store all day long, claiming, 'Today is the lowest price!' They're already out of stock, and even if you order gold bars, they'll take three weeks to arrive, and silver bars will take four months." He added, "Orders started piling up before Chuseok, but now, with prices hitting record highs every day, we're experiencing a surge in investment inquiries. Phone orders are pouring in, making it difficult to even respond to them in-store."
This surge in demand is also evident in the KRX gold market. In September, the KRX gold market recorded a yearly high of 3.8 trillion won in trading volume, and in October, 1.6 trillion won was traded in just five trading days. Gold prices are currently breaking record highs, surpassing 220,000 won per gram.
The KRX gold market is a formalized marketplace where individuals and institutions can buy and sell gold like stocks. Designated business operators, known as "proprietary trading members," purchase and sell gold. Currently, 92 member companies are registered, of which 24 are licensed as gold suppliers. Representative proprietary trading members include the Korea Gold Exchange, Samsung Gold Exchange, Daesung Metal, Poongsan Hwadong Trading, and Shinhan Metal.
In particular, the Korea Gold Exchange (KGO) offers both trading and physical withdrawal functions in the KRX gold market, effectively leading the entire process of distribution, trading, and storage within the market. With the KGO's suspension of sales, a significant portion of proprietary trading is likely to shift to the KGO.
Experts predict that this incident will solidify the Korea Gold Exchange's position as the center of the KRX proprietary trading market. This is because, in a world where securing physical gold is difficult, only a handful of distributors have secured stable trading practices. Consequently, the concentration of trading in the KRX gold market is expected to increase, increasing the likelihood of a market reorganizing from one centered on physical gold to one centered on institutional investors.
Amidst the surging price of gold, global supply shortages, and domestic distribution network instability, the KRX gold market is emerging as a new haven. At its center is the Korea Gold Exchange, which dominates both the physical gold market and the trading infrastructure.
