Japanese Prepare For "Abenomics Failure", Scramble To Buy Physical Gold

Tyler Durden's picture

As we reported yesterday, the world's most clueless prime minister, Japan's Shinzo Abe, has suddenly found himself in a "no way out" situation, with inflation for most items suddenly soaring (courtesy of exported deflation slamming Europe), without a matched increase in wages as reflected in the "surprising" tumble in household spending, which dropped 2.5% on expectations of a 0.1% increase in the month ahead of Japan's infamous sales tax hike. How does one explain this unwillingness by the public to buy worthless trinkets and non-durable goods and services ahead of an imminent price surge? Simple - while the government may have no options now, the same can not be said of its citizens who have lived next to China long enough to know precisely what to do when faced with runaway inflation, and enjoying the added benefit of a collapsing curency courtesy of Kuroda's "wealth effect." That something is to buy gold, of course, lots of it.

According to the FT, "Tanaka Kikinzoku Jewelry, a precious metals specialist, reported that sales of gold ingots across seven of its shops are up more than 500% this month. At the company’s flagship store in Ginza on Thursday, people queued for up to three hours to buy 500g bars worth about Y2.3m ($22,500). March has been the busiest month in Tanaka’s 120-year history."

Of course, while the Japanese consumers know what is the best defense against runaway inflation and purchasing power destruction, the government also knows that just like in India, where massive gold imports to satisfy local demand so skewed the current account deficit that India spent most of 2013 imposing gold capital controls, it simply needs to make gold purchases impossible in order to redirect spending into more Keynes-approved products and services.

However, for now Japan is happy just to crush its population's meager disposable income with soaring energy prices. Which also means the locals can allocate their personal capital in the most efficient way: one which discounts a very unpleasant future.

Investors are being drawn to the metal not just because of higher taxes, said Itsuo Toshima, an adviser to pension funds.“Slowly and steadily, people are preparing for the worst, which is the failure of Abenomics." “To protect the value of wealth, gold comes into play as an inflation hedge, and if the economy goes back to deflationary circumstances then, again, money seeking safe havens would flow into gold.”

Wait, did someone in Japan finally admit the inevitable, i.e., that Abenomics will crash and burn in a pyre of runaway inflation and a crashing economy? Well, good. The problem is that when that moment happens, the response to the government's "all in" bet to led its population into the slaughter will mean that one will need lead far more than gold.

But we'll cross that bridge when we get to it. For now, we eagerly look forward to yet another major buyer of gold emerging on the global landscape, alongside China, India, and all other countries not transfixed by the dulcet tunes of central-planning and nominal paper profits.

Japan’s hunger for gold bars is at odds with general sentiment towards the precious metal, the price of which fell 28 per cent last year, bring an end to a 12 year bull run. Yet Yuichi “Bruce” Ikemizu, head of commodities trading at Standard Bank in Tokyo, said retail buyers had been tempted into purchases by lower prices.


The Fruit of Gold ETF managed by Mitsubishi UFJ Trust and Banking, the country’s most popular bullion-backed investment vehicle, saw its assets rise from 5.6 tonnes, when Mr Abe assumed power in December 2012, to 6.9 tonnes now – even as the US dollar price of gold fell by more than a fifth over that period.


Individual investors in the fund numbered 15,243 in mid-January, a sharp increase from 9,849 a year earlier, said general manager Osamu Hoshi.


At Tanaka’s third-floor store in Ginza, one 33-year trader at a foreign-owned brokerage, who did not want to be named, said the tax increase represented a “good opportunity” to buy more gold as he was worried about holding too many yen-denominated assets.


“I plan to hold it for a long time until there is a good time to sell when the yen collapses or something,” he said.


Even a strong rise in Japanese gold purchases is unlikely to affect the global bullion market. Last year consumer demand in Japan was 21.3 tonnes, according to the World Gold Council, compared to 1,066 tonnes in China and 975 tonnes in India.

Unlikely? Really - lets see what happens when 100 million Japanese suddenly decie half a kilo of gold is precisely what the doctor ordered. Then again, this is the FT, the same media outlet that recently, and inexplicably, pulled an article discussing gold manipulation without any explanation.

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kliguy38's picture

So Sowwy.......door cwosed now......go away

Oh regional Indian's picture

When all the Mrs. Watanabe's switch to gold, boom. And all the Mrs. W's are getting older...

Japan is a crazy basket case. Interesting, perhaps telling tid-bit, Japan before WW2, 74% agrarian, Japan now 25% agrarian....BOOM!


One more time, I'd like to share my TEDx talk, thanks to all the hedgers who left a comment there and here, gratifying/good fun to read...such a mix of perspectives...



Oquities's picture

when the influx from the Mexican hordes brings down our social net, Americans will wish they had gotten gold too.

cifo's picture

These zombies are finally waking up.........

Pladizow's picture

"....busiest month in Tanaka’s 120-year history."


strannick's picture

These barbarians are choosing relics over government guarantees

Pinto Currency's picture



Turning Japanese

I think we're turning Japanese

I really think so.


manofthenorth's picture

OK so stop me at the part where I am way off;

It is all about market share right ? Lets suppose every man , woman and child wants some Gold and Silver this year and world productions stay the same as last year. For Silver there will be one appx. 1 ounce for every ten people. For Gold there will be appx. 1 ounce for every 100 people , for an entire year !!! There simply is not enough to go around once the herd shifts its focus from promisses to hard assets in hand. What would the wealthiest person in 10 pay an ounce of Silver ? What would the wealthiest person in 100 pay for an ounce of Gold ? There is an awful lot of FIAT floating around out there.

With all the "wealth" created the last 4 decades TRUE and hurried price discovery would be crazy.

Unfortunately we will probably see WW3 before we see "FREE MARKETS"

Time will tell, until then...just KEEP STACKING

TruthInSunshine's picture

Do the opposite of whatever grips the mindset of the average Japanese during a "investment trend" in Japan.

I am not speaking to any other issues here (for instance I absolutely believe that Abenomics will fail miserably - it already has broken), But in all of recorded history, I can not think of a single better fade signal (at least as good as fading Tom Stolper's recommendations of Goldman Sachs infamy, and that is saying something) than what Japanese are doing en masse at any given "tradeable moment."

BandGap's picture

We are living in the movie "The Sixth Sense".  We at ZH are the kid that sees dead people. The American public is Bruce Willis. Think about it, the realization of what is going on is slow, and will be painful. But it is happening rigt now.

Oquities's picture

nice analogy.  the American public and Bruce Willis were busy fooling themselves about reality

BandGap's picture

The fooling is being helped along by the greedy assholes trying to leave the ship with as much stolen money as possible.  The other problem, much like Bruce's, is we have been trained to believe that was has happened will continue to happen. And much like Bruce focussing on the kid having a problem in the movie, instead of seeing his part in the scenes, his realization happens slowly. Bruce saw the signs individually but didn't connect the dots till the end. People are now seeing the signs.

It will be rude awakening. Very few people younger than 40 have seen a different paradigm as far as the US, both in terms of the wroldview and he strength o the economy...

somecallmetimmah's picture

Dude, greedy assholes are people, too.  Don't give in to H8.

mt paul's picture

i see dead economies ....

silverserfer's picture

does that make fonestar the naked retard boy who shoots bruce willis in the end?

SgtShaftoe's picture

Beautiful story Vivek!  I'm trying to reinvent myself as a farmer.

Oh regional Indian's picture

Thanks SgtS :-) That is on my near term to-do also, back in touch with the earth, planting....good luck, you will need to unperform to re-in-vent!


SgtShaftoe's picture

Exactly!  Conventional agriculture is completely wrong in it's approach.  I've seen it exceed the level of absurdity since childhood on a farm.  I figure that if you make happy living soil, you have happy plants.  I've been getting into the work of Jean Pain:


Oh regional Indian's picture

Too true, same with what shamelessly passes for Animal Husbandry...please see the work of Viktor Schauberger and other vortex water people to see how you can get good water to the plants, anumals and yourself.


Also see : http://www.permies.com/t/31649/pdm/Permaculture-Designers-Manual-Chapter...

Permaculture is a deeply grounded, waste free way...

SgtShaftoe's picture

Awesome!  Thanks!  A couple great books to add to my queue.

caShOnlY's picture

I'd like to share my TEDx talk

very cool instrumental demonstrations.  But unfortunately you are overshadowed by Janet Yellen when she plays the famous FED instrument - FIAT.    


New World Chaos's picture

Nice.  Good to see a fellow ZHer getting out and infecting the rest of the brain trust.  These are the kind of people who might end up rebuilding.  You (and Orwell) are right about the puppetmasters' corruption of language, BTW.

Pooper Popper's picture


dis Bigga provblem!

KnightTakesKing's picture

Hey, if inflation is a problem, just take food out of the inflation calculation. Bingo, low inflation, problem solved.

You're welcome.

fonzannoon's picture

Does anything out there symbolize America more than this guy?



centerline's picture

That was the funniest thing I have seen in awhile!

joego1's picture

I wonder if he had that big shit eating grin on his face while he was spinning out?

tarsubil's picture

What's with all the angry guys driving big shiny trucks? Saw a psycho do something like this the other day on the road when the guy in the left lane was trying to get over and out of the way. By the grace of God, an accident didn't occur. The moron almost got a bunch of people killed.

Fact: A big shiny truck will not make you happy or your penis larger.

ParkAveFlasher's picture

His body as a physical organism can't digest all the hot pockets and fast food he consumes.  As a result, the physical organism goes into a hostility mode as it interprets the data that it receives from its gut as it is living in a starvation/pestilential environment. This will be exacerbated by underlying psychological weakness by constant infliction of impotence-via-mass-suggestion. 

Greenskeeper_Carl's picture

I wouldn't have acted like that, flipping her off and trying to speed off like a cool guy, but people creating a moving road black like that, right next to another car, in the passing lane, when she could have either slowed down or sped up for a couple sexonds and gotten over is pretty infuriating.

Deathrips's picture

Whats funny about that video is that the woman was brake checking the guy in the truck..as she was driving 50 mph in the fast lane. This short clip edits out the cuaise of the bird sighting. Now he is the bad guy...reminds me of MOPE.  What a Bitch . I hate people with bad driving etiquette.



fonzannoon's picture

It's funny I saw the longer version and I was concerned that 2 mins was too long and everyone would lose interest before the fun part.

I'm not saying the driver was not partially at fault, and also a dumbass for taking video while driving. I'm just saying when I think of America I picture a meathead retard in a big pickup truck smirking and giving the world the finger and then driving into a ditch.

centerline's picture

That's what I thought made it so funny... the parallel to American society in general.  lol.

IronShield's picture

Heck; great video.  After watching the following popped up:  https://www.youtube.com/watch?v=Tb6X-pO6IiU

Liked that one even better (chicks with the g; good lord).  Funny thing is, Neil Cadooffo was mocking the National Fitness Program being implemented by Russia.  Looks like they're well on their way.  Could use some of that for the Lardus Americanus.

caShOnlY's picture

Does anything out there symbolize America more than this guy?

bet that "doodz" is in a heap of debt, aren't most bill-bobs in pickup trucks?. But he sure looks good behind the wheel of an F250 "SOOPER DOODY". 

NoDebt's picture

China buying TONS of the stuff didn't raise the price of physical, why would we think Japan buying it would?

LawsofPhysics's picture

Yes, and if true, shouldn't the people who actually produce the stuff catch a fucking break?

ParkAveFlasher's picture

If you think all the Asian buying didn't bite the price, wait until all the Asian selling happens!

LawsofPhysics's picture

Well, I certainly won't complain about a sale on PMs.

You really think that you will be able to take delivery if gold went back under $1,000 or $500 an ounce?

good luck...

kito's picture

LOP, its groundhog day........back up the truck.........keep stacking........

ParkAveFlasher's picture

Junkers: I know it's not the meme du jour, but the same hand that manipulates downward, manipulates upward and sideward as well.