Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Japanese Go on Gold-Buying Spree as Price Inflation Runs Rampant

  by    0   1

With price inflation running rampant in Japan, Japanese households are rushing to buy gold.

The sudden surge in demand, along with the devaluation of the yen, has driven the price of gold to record highs in yen terms.

The yen fell sharply against the dollar this year as decades of easy money finally caught up with the Bank of Japan. The Japanese currency recently rose above ¥146.5 against the dollar

The central bank managed to print yen for decades, but as it always does, monetary inflation has now reared its ugly head in the form of price inflation.

According to the Financial Times, the sudden rush into gold and the rise in retail gold prices in Japan “was part of a rapid shift in household attitudes to risk as years of deflation have given way to rising consumer prices.”

While the yen doesn’t enjoy the dollar’s reserve currency status, it has historically been considered a safe haven asset. That allowed the Japanese government and central bank to get away with inflationary policies for a lot longer than it might have otherwise. Nevertheless, when you keep creating currency out of thin air, it will eventually lead to price inflation. (Americans should take note.)

According to Japan Catalyst Fund economist Jesper Koll, an urgent search for inflation protection after years will little incentive to move out of cash is driving the flight to gold in Japan.

The fact that gold is a non-yen asset helps, but the trigger is inflation.”

Eiichiro Kato serves as the GM for Tanaka Kikinzoku’s Precious Metals Retail Department. He told the Financial Times that gold had become particularly attractive to customers concerned about the yen’s fall to multi-decade lows and their assets being denominated in yen. He went on to explain that global central bank gold buying, economic news from the US,  and Fed monetary policy were driving the decision to buy gold in yen with the hope that the dollar-denominated gold price would remain “high and stable.

We do not see many factors that would cause the dollar-denominated price to fall significantly, and we think that the yen-denominated price could rise further if the yen continues to weaken.”

Gold demand recently drove the piece above the ¥10,000 per gram level for the first time.

ZeroHedge said the weak yen will only get weaker.

Occasional desperation intervention aside – as long as there was no signal from the Bank of Japan that it is ready to tighten its ultra-loose policy which won’t happen for a long time (and when it does, it will spark a collapse in the JGB bond market forcing the trapped BOJ to immediately reverse once again) demand for gold in Japan will only keep rising.”

Download SchiffGold's Why Buy Gold Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Death of Iranian President Carries Gold, Copper to New Record Highs

Amid ongoing tension in the Middle East, Iranian President Ebrahim Raisi and the foreign minister have been confirmed dead Monday after a helicopter crash. The officials’ shocking demise casts additional investor doubt on a region already plagued by economic upheaval, with supply chain uncertainties fueling record-high metal prices this week.

READ MORE →

South Korea’s New Way to Pursue Safety

While gold bullion is most often sold in bar or 1oz coin form, the Korean retail market is benefitting from gold’s latest success with a very atypical marketing strategy. It has been traditionally thought that investors prefer larger increments of bullion because they simplify calculations and have a lower transaction cost than buying the same amount of gold in smaller increments. Demand for traditional bars and coins in South […]

READ MORE →

What Will CBDCs Mean for Gold?

With the eventual introduction of central bank digital currency (CBDCs) now seemingly inevitable, there are a lot of directions central banks could take with their digital currency projects that would have dramatic implications for the price of gold.

READ MORE →

Will the World’s Most Pro-Bitcoin Politician Embrace Gold?

Since Nayib Bukele became president of El Salvador, El Salvador has been in American media and global political discussion more than ever. While much of the attention focuses on Bukele’s mass incarceration of gang members and a decline in homicide of over 70%, Bukele has also drawn attention to his favoritism towards Bitcoin and how he […]

READ MORE →

Too Hot to Handle: Gold Due for a Correction?

With gold hitting yet another awe-inspiring all-time high in the wake of Powell’s remarks reassuring markets (more or less) to expect rate cuts in 2024, a few analysts are pointing out risk factors for a correction — so is there really still room to run?

READ MORE →

Comments are closed.

Call Now