Large gold exports seen pointing to nation’s weakening clout


Japan saw a large outflow of gold in fiscal 2011, which ended in March, prompting analysts to warn of the country’s declining economic power.

Gold exports jumped 61 percent from the previous year to some 135 tons in the year, according to recent trade data from the Finance Ministry. This was apparently because a surge in prices encouraged individuals to sell their gold items.

Japan has continued to log annual net exports of gold since fiscal 2006.

Gold prices in the country hit a 31-year high of ¥4,745 per gram last August, up 5.2-fold from a trough in September 1999, according to precious metals dealer Tanaka Kikinzoku Kogyo K.K.

Individuals who purchased gold during a gold investment boom in the 1980s sold their holdings to realize profits, market sources said. Tanaka Kikinzoku Kogyo bought about 15 tons of gold from individuals in August alone, five times as much as its usual monthly purchase.

Reluctance to invest in real assets amid Japan’s protracted deflation also pushed investors to unload their gold, the sources said.

Increasing gold outflows from Japan “represent the country’s declining economic power,” said Itsuo Toshima, former Japanese representative at the World Gold Council.

“Historically, gold has flowed to wealthy countries.”

Toshima said gold now seems to be flowing from Japan to China, the United States and Europe. According to the Finance Ministry data, major importers of Japanese gold included Hong Kong and Britain.

In China, people tend to invest their money in gold, instead of depositing it at banks, given that real interest rates, or deposit rates minus inflation, are often negative in the country, where upward pressure on prices remain strong, market observers said.