Gold Market Opened to Eliminate 'Kimchi Premium,' Sparking Backlash from Domestic Refiners

[Anchor]

The Korea Exchange has recently allowed foreign companies to supply gold to the domestic market. The move is intended to facilitate the supply of gold, for which there is high demand, but the domestic gold refining industry is pushing back, warning that it could collapse the industrial ecosystem.

Reporter Song In-ho has the story.

[Reporter]

This is a gold refinery in Korea.

They refine various gold jewelry, such as rings, bracelets, and necklaces purchased from precious metal shops, to produce 99.99% pure gold bars.

Orders have surged in recent years as gold prices have skyrocketed.

[Min Byung-kwon/Employee at a gold refinery: Two years ago, we produced 20kg of gold bars a day, but now we produce about 30 to 50kg. The workload has effectively doubled.]

Despite the increase in work, a sense of crisis is looming over the domestic gold refining industry.

Since the Korea Exchange allowed foreign companies to supply unlimited amounts of gold to the KRX gold market in April, there are concerns that the domestic precious metal industry could be undermined.

The Korea Exchange maintains that it allowed foreign participation because domestic supply could not keep up with gold demand last year, when international gold prices soared.

The intention is to protect investors by eliminating the so-called "Kimchi Premium," where domestic prices are higher than international gold prices.

On the other hand, the domestic precious metal and gold refining industry argues that the exchange's opening of the gold market is focused solely on short-sighted supply-side issues.

[Oh Hyo-geun/Chairman of the Korea Jewelry Industry Association: The country's ability to manage foreign exchange through gold will rapidly deteriorate, and the manufacturing, distribution, and retail ecosystem of the jewelry industry, which accounts for over 95% of our small business owners, will be driven to the brink of mutual destruction.]

At a recent National Assembly debate, it was also suggested that gold should be managed as a national strategic asset rather than a simple investment asset, and that the domestic gold market must be protected.

[Min Byung-duk/National Assembly Member of the Democratic Party of Korea (Chairman of the Euljiro Committee): This is because if the order of the gold market is disrupted, the first people to be hurt will be those in the industry who have persevered for a long time with their skills and trust.]

Major gold-consuming countries around the world, such as China and India, also limit the supply of gold by foreign companies to foster their own gold-related industries.

(Reported by Lim Dong-guk | VJ: Kim Hyung-jin | Video Editing: Kim Jin-won)
※ Please note: This article was translated by AI and may contain errors.