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Gold Prices in South Korean Won
Gold is a popular commodity that has been traded all over the globe for centuries. Although gold prices are often associated with the U.S. Dollar, gold can be quoted in and transacted in any currency. Gold prices are typically quoted per ounce, gram and kilo, with one ounce and fractional weights being most popular among individual investors.
The won, otherwise referred to as the Korean Republic Won, is the official currency of South Korea. The won is issued by the Bank of Korea, Like many other currencies, it can be subdivided into 100 smaller units of currency, known as jeon. These smaller units of currency are not used in day-to-day transactions, however, and are only used for determining foreign exchange rates.
After Korea split into North and South following World War II, the currencies of both countries replaced the previous Korean yen at par. Both counties use the term won for their respective currencies. Due to current exchange rates between South Korean Won and the U.S. Dollar, prices quoted per ounce in won may seem extremely large.
Gold Pricing in South Korean Won
If you are looking to buy gold bullion or jewelry in South Korea, you will likely see the price of gold quoted per ounce, gram and kilo in the local currency. As a global commodity, the price of gold is always fluctuating and can be influenced by many different factors. Some of the biggest potential influences on the price of gold include:
- Interest rates
- Currency values
- Central bank activity
- Investment demand
The Korea Exchange
The Korea exchange was created by combining the Korea Stock Exchange, The Korea Futures Exchange and the KOSDAQ stock market per the Korea Stock and Futures Exchange Act.
The derivatives division of the exchange lists various instruments including futures contracts on interest rates, U.S. Dollars, euros, lean hogs and gold.
South Korea Economy
The South Korean economy is one of the largest in Asia, and ranks in the top 20 for global economies. South Korea is one of the fastest growing developed countries in the world, and rose rapidly from a relatively poor country to a developed, high income country in a single generation.
Technological advancement and a highly educated population have fueled the nation’s economic growth.
South Korea has little in the way of natural resources, and is a major exporter of semiconductors, wireless telecommunications equipment, cars, computers and more. China is the country’s main trading partner, followed by the United States.
Like other central banks around the globe, the central bank of South Korea holds gold as part of its reserves. As of December 2016, the central bank reportedly had 104.40 tons of gold in its reserves. Central banks buy and hold gold bullion for numerous reasons. Gold can potentially provide additional diversification for the central bank’s reserves, and may also add credibility to the nation’s currency.
The South Korean Gold Rescue
In the late 90s, South Korea nearly went belly up. The Asian financial crisis was spreading, and there were fears of a global economic meltdown if the crises could not be contained.
Before the late 90s, South Korea had been an excellent example of economic resilience due in part to major reforms and education. The lifestyles of South Korean citizens rivaled that of the West, and the country was enjoying its prosperity.
In 1997, the Asian financial crises spread to South Korea, resulting in failed businesses, massive job losses, and banks collapsing. Liquidity dried up and the nation was forced to turn to the IMF for assistance. The IMF authorized a $58 billion bailout package, and South Korea wasted no time in trying to repay the loan. The following year, in 1998, the country launched a “Drive for gold.”
South Korean households had billions of dollars’ worth of gold in the form of jewelry, coins, bars, trinkets and more. To make a long story short, the citizens of South Korea donated gold in various forms to raise money to help repay the IMF in what was an amazing show of patriotism and self-sacrifice. Although the effort raised over $2 billion which was just a fraction of the amount owed, the gold drive served as a rallying point for the country to tackle its debt. South Korea ended up paying off the IMF loan three years early.