-- Posted Tuesday, 8 January 2013 | | Disqus

Japanese pension funds and gold-backed exchange traded products are going to more than double their gold holdings over the next two years to $1.1 billion, buying some 27 tons of gold at current prices, according to veteran World Gold Council representative Itsuo Toshima who is quoted today on Bloomberg.

His warning comes as new prime minister Shinzo Abe has pledged to push inflation to two per cent leaving Japan’s pension funds no option but to hedge against a weakening yen. Japanese investors have long ignored gold as irrelevant in their depressed, inflation-free economy. That is set to change.

Gold’s return

‘Bullion’s role as an inflation hedge, long ignored by Japanese fund operators, has come under the spotlight thanks to Abe’s economic policy,’ said Mr. Toshima. ‘Gold may be a standard asset-class in the portfolio of Japanese pension funds as Abe’s target is realized.’

The Government Pension Investment Fund of Japan, the operator of the world’s largest pension fund has avoided bullion and commodities and has 67 per cent of their assets allocated to Japanese bonds.

‘Pension money invested in bullion is ‘peanuts’ at the moment,’ Mr. Toshima added. ‘If one per cent of their total assets shift to the metal, the gold market would explode.’

Joe public?

ArabianMoney concurs and we also wonder what will happen as the Japanese public catches on. They are among the greatest savers in the world and also huge holders of domestic bonds.

Is this not the transfer from bonds to the very tight gold and silver markets that we have been talking about for some time now? The price upside for precious metals in this transfer is going to be huge because there is a collossal value stored in paper and to absorb that money bullion will have to soar in value.

We think the Japanese market is the one to watch at the moment for the next step in the global financial crisis. This is it, a bond crisis in the making and a massive transfer of wealth into gold and silver.

-- Posted Tuesday, 8 January 2013 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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