Interesting article on gold, particularly regarding how the Japanese view it:

For Eriko Ebina, standing outside a downtown Tokyo medical equipment store that has a side business buying gold, the recent surge in prices for the precious metal was just too tempting.

“For more than 30 years, I kept gold jewelry mother bought for me, and with media saying prices are high, I thought I would sell them now except for a few keepsakes from her,” said Ebina, in her 60s.

“I earned more than I thought they were worth. I’m not interested in buying gold.”

via Analysis: Japanese cash in on gold price boom | Reuters.

The other day, I passed a gold shop.  The last time I’d been there, there was hardly anyone around but that day there was a queue snaking out the door. Almost everyone was selling their gold/jewelry.  When I inquired, I was told that just to get to the front of the queue (where you got a numbered ticket and had to wait again) was a 1-hour wait!

The article above taught me that Japan actually exports gold:

NET GOLD EXPORTER

As long as Japanese remain sellers as the price rallies, Japan is set to be a net gold exporter for the sixth consecutive year in 2011.

….

Gold in Japan is not so much associated with risk aversion, but more as an asset that many bought when prices languished for 30 years.

The retail price at Japan’s largest bullion house Tanaka Kikinzoku Kogyo was 4,745 yen per gram on August 23, excluding the 5 percent consumption tax, the highest since September 1980. Retail gold peaked in January 1980 at 6,495 yen.

Selling of gold has snowballed since the start of August, unlike in January 2008 when a spike in gold prices led to an explosive but short-lived gold sales boom, said Osamu Ikeda, Tanaka’s general manager.

“Selling accelerated in August as gold rallied to historic highs, and that is symbolic of a matured Japan,” Ikeda said.

Ikeda said the amount of gold for investment purposes that the house bought back from customers more than doubled to 10.2 tonnes as of August 23 from 4.3 tonnes in July. At the August 23 prices this would be worth around 48.4 billion yen.

Sellers are not limited to retired or retiring generations nor shops confined to established bullion houses.

“Customers bring all sorts of jewelry, gold cups, watch, teeth, but sometimes desperate ones bring fake gold or even their talismans,” said Seiichi Nakamura, manager at confectionery retail chain Nakamuraya.

“A lot of stores of this kind appeared recently, so that it turned into sort of a survival game,” he said, adding the number of customers, mainly women in their 40-50s, had doubled to 20 a day in recent days.

Media playing up the surge in gold is also driving the move.

“The media helped us, I think. When people learned there is a boom for selling gold now, they decided to do it too. It’s like a chain effect,” said shop manager Kenta Okiyama at antique dealer Otakaraya.

Tanaka Kikinzoku’s Ikeda said buying interest has picked up, even in the physical market, from those in their 30s and 40s, although sellers still outnumber buyers by 5 to 1.

“It used to be one-way flows of just sellers. Now, there are sellers to book profits and some buyers betting on further rises in prices,” Ikeda said.

Tags: Gold, Japan