People who have been paying close attention to the financial markets as of late may have noticed the situation affecting the Japanese Yen. This particular currency has been on a tear as of late, prompting intervention by the central bank of Japan. This is not good news for the local economy, though, as it causes deflation. Interestingly enough, Japanese consumers and investors are turning towards gold all of a sudden.
Japanese Investors Flock To Gold
The soaring value of the Japanese Yen is causing some unrest among citizens as well. In the past, residents and investors would flock to cash whenever financial uncertainty was looming overhead. But that situation has come to change, as there is a sudden increased interest in gold. In fact, Tanaka Holdings Co – the largest bullion retailer in Japan – saw its sales jump by as much as 60% between may and June 2016.
This is not entirely surprising, as the value increase of the Japanese Yen makes buying gold more affordable for Japanese residents. At the same time, the Bank of Japan is monitoring the situation closely. Intervention by the Bank is expected in the coming weeks, which will push the value of the yen down again. Experts indicate the BOJ will look to buy as much foreign currency as they possibly can.
Since it is not the first time Japan is dealing with such a situation, residents and investors are taking adequate precaution to minimize the devaluation effect. Gold seems to be preferred investment vehicle of choice for now. Oddly enough, the value of gold in yen terms has only increased by 7.5% in 2016. The USD-priced value of bullion rose by 28 % so far, leaving a wide gap waiting to be filled.
But there is another reason for investors to flee to the local gold market. Overseas investment opportunities look very bleak for the time being. Unlike those opportunities, gold is globally recognized, and it is not something that can be created out of thin air. Inflation in gold is certainly present, but there is only so much of the material to be ever put into circulation.
Avoiding Financial Turmoil
To make gold even more appealing, it is a viable way to prevent negative interest rates. Albeit bullion doesn’t offer any dividends or interest in the traditional sense, the appreciation of gold allows for profits to be made. When everything’s said and done, gold seems to be a far more favorable investment vehicle compared to government bonds or stocks, given the current climate. Plus, it does not require extensive research to turn gold into a successful investment.
Japanese investors who are looking into buying gold should keep an eye on the Vaultoro exchange. This platform also lets users trade gold against Bitcoin, which is gaining a lot of popularity in Japan as of late. Hedging against financial turmoil through a diversified portfolio is the right way forward. Both Bitcoin and gold is an option well worth considering.
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