Tanaka Kikinzoku Kogyo K.K., Japan’s biggest bullion retailer, said sales to local investors may exceed purchases this year for the first time since 2004 as lower prices and the yen’s weakness spur buying interest.
“Japanese individuals are thinking of gold as an asset for their investment portfolio as well as insurance for the future,” said Kate Harada, general manager of the precious metals department at Tanaka Kikinzoku, a unit of Tanaka Holdings Co. “A growing number want to use gold partly to hedge against their yen-based assets such as stocks and properties.”
The slump into a bear market in April spurred demand for jewelry and coins around the world and the second half of the year usually sees gains in physical demand for weddings and religious festivals in Asia, including India and China, the biggest buyers. Gold in London slid 23 percent last quarter, touching a 34-month low of $1,180.50 an ounce on June 28, after investors lost faith in the metal as a store of value and as the Federal Reserve said it may taper stimulus.
Gold bars of 500 grams are the most popular among individual Japanese customers, according to Harada, who oversees Tanaka’s sales of jewelry, bars and coins and physical trade, said Friday. Japan’s imports of gold more than doubled to 7,686 kg in January to May, from 2,994 kg a year earlier, according to Finance Ministry data.
The yen has depreciated 14 percent against the dollar this year following unprecedented monetary stimulus as part of Prime Minister Shinzo Abe’s “Abenomics” economic program to end deflation. The yen touched 103.74 per dollar in May, the weakest since October 2008.
Gold priced in yen fell 15 percent this year, compared to a 27 percent drop for gold in dollars. Gold futures on the Tokyo Commodity Exchange touched a record ¥5,081 a gram ($1,562 an ounce) on Feb. 7 as the yen weakened.
Gold for immediate delivery fell 0.4 percent to $1,217.97 an ounce. The metal retreated 23 percent in the second quarter.
Goldman Sachs Group Inc. said gold will reach $1,050 by the end of 2014, Credit Suisse Group AG anticipates $1,150 in 12 months and Danske Bank A/S sees a drop to $1,000 in three months, taking prices below a level some mines need to break even.
Tanaka has attracted increasingly younger customers in the past three years after two decades of deflation deepened anxiety about jobs and the country’s pension payouts, said Harada. Tanaka manages eight shops directly and has 120 dealerships nationwide.
Monthly trading volume for Tocom gold futures fell to 1.09 million contracts in June from 1.12 million contracts in May after reaching 1.72 million contracts in April, the highest level since September 2009, according to data from the bourse.