Japanese with cash are buying gold as they reconsider “Abe-nomics”



Turned the television on last night to catch a news clip of a Japanese woman at a gold retail store in Ginza as she put down ¥4.5 million in cash for about ten small ingots of gold. When asked why she was buying the gold ingots, she said that she felt very uncomfortable about “Abe-nomics and was preparing for the worst”. Although no details were talked about on what she thought the “worst” was, we can conclude that the BoJ is “out of bullets”. Kuroda’s BoJ has been cranking out US$55 billion a month (although I don’t think this is a good figure) in quantitative easing (QE) as the Nikkei plunged almost 500 points after concerns were made known about China’s credit. BoJ’s Kuroda warned that “further QE might threaten the bank’s finances.” BoJ’s Kuroda stated three important indicators: 1) No plans at the moment to add to monetary easing; 2) Japan’s potential growth rate is at or below 0.5%; (3 QQE policy as a risk for BoJ’s finances. Reading between the lines and considering Kuroda doesn’t want to scare anyone, he was probably indicating that the Fed come around to reality. Which it won’t, not with US$1.2 quadrillion in futures and derivatives coming at them with falling oil prices. Shortly after he stated these indicators, the Nikkei went south almost 500 points.

The Bank of Japan’s current governor Haruhiko Kuroda, gave remarks at the Farewell Symposium for Honorary Governor Christian Noyer Held by the Banque de France and Bank for International Settlements on January 12 titled “Japan’s Experience of Overcoming the Zero Lower Bound” explaining the BoJ’s “quantitative and qualitative monetary easing (QQE).” If anyone reads this and comprehends the significance and can explain it in layman’s terms please let us know. The only thing I walked away with is that the BoJ has been printing a huge amount of cash attempting to keep inflation at 2 percent (hidden tax and this doesn’t mean prices are going up, it means the amount of money is increasing), and the BoJ has been buying assets because there has been no real significant increase in production. I mean, how much shit can people buy? It was originally called simply “quantitative easing” but the BoJ has since added the additional “qualitative” I guess to improve the cash printing policy.

Haruhiko Kuroda gives regular press meetings and the description is amusing outlining basically BoJ policy for the benefit of investors. Kuroda is giving clues. Clues? So the real intended BoJ policies are never fully revealed:

Kuroda, BoJ’s governor, will give a press conference in order to communicate with investors regarding monetary policy. He talks about the factors that affected the most recent interest rate decision, the overall economic outlook, inflation, and clues regarding future monetary policy.

The only clue I see are more and more Japanese heading down to that gold retail store in Ginza stocking up on gold.


2 thoughts on “Japanese with cash are buying gold as they reconsider “Abe-nomics”

  1. Printing money and quantitative easing will continue to hold down the value of the yen vs. other currencies and it will continue to drive inflation domestically. But eventually, there will be no assets to buy, the yen will be too cheap to support trade and it will be too weak to buy JGBs. Then the yen will go back up. The poor lady buying gold is probably going to be unhappy as gold is down vs the dollar and up vs. the yen. Assuming she is yen-based, she should probably just wait for the yen to recover which it will, when QE and printing money is no longer viable. The yen will go back up vs. the dollar and will also rise vs gold. Her best option is to hold yen for now.

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