Archive - Dec 18, 2012 - Story

In March 2012, Okayama Metal & Machinery became the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies. Okayama manages pension funds for about 260 small and mid-sized companies in the Okayama area. "By diversifying currencies, we aim to reduce risks associated with them," said Yoshi Kiguchi, the fund's chief investment officer. "Yields become stable if you put small amounts into as many types of holdings as possible." Of its 40 billion yen ($477 million) in assets, the fund has invested around ¥500 million-¥600 million in gold, he said. Initially, the fund aims to keep about 1.5% of its total assets of Y40bn ($500m) in bullion-backed exchange traded funds, according to chief investment officer Yoshisuke Kiguchi, who said he was diversifying into gold to “escape sovereign risk”. Other pension funds in Japan are following their lead according to the Wall Street Journal. Japanese pension funds are diversifying into gold "largely to mitigate the damage from possible market shocks"... Mitsubishi UFJ Trust and Banking Corporation said it has secured more than Y2 billion in investments from two pension funds for a gold fund it started in March.

• Obama Concessions Signal Potential Bipartisan Budget Deal (BBG)
• Cerberus to sell gunmaker after massacre (CNN)
• With New Offers, Fiscal-Cliff Talks Narrow (WSJ)
• Judge rejects Apple injunction bid vs. Samsung (Reuters)
• U.S. policy gridlock holding back economy? Maybe not (Reuters)
• President fears for Italy’s credibility (FT)
• Struggles Mount for Greeks as Economy Faces Winter (WSJ)
• Abe leans on BoJ in post-election meeting (FT)
• Bank of Japan to mull 2 percent inflation target as Abe turns up heat (Reuters)
• EU exit is ‘imaginable’, says Cameron (FT)
• Mortgage Risk Under Fire in Nordics as Bubbles Fought (BBG)
• Sweden cuts interest rates to 1% (FT)
• External risks impede China recovery, more easing seen (Reuters)

By this point it has become clear to everyone that all fact-based news can be safely ignored, and all that matters is the ongoing Fiscal Cliff pantomime as has been the case for the past month. Sure enough, looking at the futures, it is clear that following yesterday's detailed disclosure, the market is convinced, that a deal is virtually assured. This is in stark contrast to 48 hours ago, when it thought the opposite. It will likely continue thinking this until Boehner has a TV press conference later today and bursts the latest bubble of bipolar enthusiasm which has now shifted to euphoric for the time being.