Young Koreans flock to 'gold vending machines' as prices soar

Economy

Published: 21 Apr. 2024, 15:22 Updated: 22 Apr. 2024, 15:26

Young Koreans flock to 'gold vending machines' as prices soar

A customer shops for a gold bar with a vending machine at a convenience store in Seoul on April 9. [NEWS1]

In a corner of a GS25 convenience store in Gangnam District, southern Seoul, stands a gold-colored vending machine. After a quick authentication and payment process, a fingernail-sized gold bar drops from the dispenser.

The vending machine offered varied options — 0.5 grams (0.02 ounces), 3.75 grams, and 11.25 grams — but a 28-year-old office worker surnamed Oh opted for a 1-gram bar, priced at 160,000 won ($116.03) on April 15.

“I’m collecting 3.75 grams of gold every month, but I decided to buy a 1-gram gold bar this time because the price has been soaring,” said Oh.

“It’s convenient that I don’t need to go to a jeweler’s in Jongno [central Seoul] to buy gold bars.”

Oh is one of many young Koreans who are turning to gold investments as Korea's gold transactions and prices skyrocket to a record peak. While geopolitical tensions in the Middle East escalate, investors are flocking to safe haven assets — and buyers like Oh are busily collecting small specks here and there as their tight budgets allow.

The price of gold in Korea surged to a record 456,000 won per 3.75 grams on Friday, according to the Korea Gold Exchange.

The price stood at 448,000 won on Saturday, down from its peak a day ago but still 22 percent above its Jan. 2 level.

Stubbornly strong inflation and the recent escalation of the armed conflict between Iran and Israel drove the steep hike.

The volume of gold transactions has also surged, reaching a daily average of 16.5 billion won between April 1 and 19, a record high since the market's March 2014 opening.

One factor contributing to the latest rally is the increasing number of young investors seeking gold as a safe haven asset. They mostly purchase bars of 1 to 3.75 grams of gold through online marketplaces and vending machines installed at convenience stores, as Oh did.

The sale volume of small gold bars weighing 1 gram or less jumped 68 percent in the first quarter this year from the previous quarter, according to the Korea Minting, Security Printing & ID Card Operating Corporation.

“Most of the customers using gold vending machines are in their 20s or 30s, taking 52 percent of the total,” said a GS25 spokesperson.

CU, another major convenience store franchise, also offers small amounts of gold in a chip shape. Since the program's launch on April 1, 42 percent of the products available were sold in 15 days, and 1-gram products sold out in only two days.

Other gold products targeting young investors are also gaining traction. Soo&Jin Gold, a jewelry brand, is selling “pure gold beans” weighing 1 gram online. About 12,000 gold beans have been sold so far since their launch last April.

“Those in their 20s account for 20 percent of the total customers, which is more than double the average figures for other gold products,” said a Soo&Jin Gold spokesperson while describing the beans' demographic.

“Collecting 1 gram of gold won't bring a fortune right away, but the recent trend shows how younger generations promptly react [to the market] to expand their assets within their budgets,” said Lee Eun-hee, a consumer science professor at Inha University.

BY SHIN HA-NEE, LEE YOUNG-KEUN [shin.hanee@joongang.co.kr]