Japanese Pension Funds With $3.4 Trillion In Assets Seek Safety In Gold

December 18, 2012

The world’s largest, most sophisticated investors are turning to gold…

These fundamentals are leading to broad based global demand for gold – from retail investors to institutions and pension funds. Japanese pension funds are increasingly looking at gold according to an article in the Wall Street Journal this morning.

Diversification into gold is taking place in order to protect against sovereign risk, debasement of currency risk and inflation risk.

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”.

Japanese pension funds invest mainly in domestic stocks and bonds. Until recently, none have looked to gold or other physical assets.

Gold, whose price movement isn’t historically correlated with those of stocks or bonds, can protect portfolios from being damaged too badly in times of market stress, investment managers say. Low interest rates also justify holding non-yielding gold in place of cash.

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.

Gold is also used as a hedge against inflation, which is becoming a bigger concern as global central banks buy ever-more bonds, market watchers say.

Even a small allocation by pension funds internationally to gold would result in a significant new source of demand which could be a new fundamental factor which propels prices higher in the coming years.

Greece Downgraded AGAIN

December 6, 2012

Greece is the crisis that won’t go away. The hapless nation’s economic and fiscal woes are really just a microcosm of what is facing the entire European Union. Debt levels are unsustainable, spending continues to be out of control and politicians attempt to place band aids on the problems, which will only make them worse in the long run.

Somewhere at the end of all this, Europe is going to be hit hard with an unprecedented economic and fiscal crisis.

Will it be touched off by a Greek default? Some observers think so. S&P has now downgraded the country’s credit rating to “selective default,” from the already lowly CCC rating.

A Greek default will not be kind to the financial markets. This is yet another crisis from which investors must protect their wealth with gold investments.


REPORT: Nuclear Iran would ‘double’ oil prices, cost millions of U.S. jobs…

October 10, 2012

Part of what we try to do at Coin Trader and on the Mind Your Money blog is to provide advance warning of external factors that may not seem to be investment-related at first glance, but which are in fact absolutely vital for investors.

One of the issues that we are following closely is the simmering conflict over Iran’s nuclear program.

We do not examine this conflict from a political standpoint, but rather strictly from an economic and investment standpoint. No matter what your view of Iran, its nuclear program, Israel or a possible US response, you MUST NOT ignore the possibility that a crisis could erupt over Iran’s uranium enrichment activity.

That means you must prepare ahead of time by diversifying into gold investments, something we deal with regularly.

But what types of conditions are likely to result from a crisis involving Iran?

Obviously, no one has a crystal ball, but a new report issued by a bipartisan association of national security and economic experts predicts extremely chaotic conditions. Here are a few of the highlights:

• The price of a gallon of gasoline in the USA could climb by an additional $2.75 per gallon

Inflation would increase to 5%, far above current levels.

• The US would be plunged into a recession, with 5 million jobs being lost.

In other words, an Iran armed with nuclear weapons would touch off a bout of 1970s-style stagflation.

Investors must be aware that in the 197os stagflation, the price of gold tripled and the stock market plunged by 45%.


September 11th

September 11, 2012

As everyone remembers September 11th in their own way, investors should take a step back and examine the implications of a horrific terrorist attack.

In the case of 9/11, it shut down the financial markets for an entire week and sent certain sectors of the US economy into depression (notably the travel and hospitality industries). The financial markets reeled from the fallout and gold awoke from a decades-long slumber. 2001 marked the first of 10 consecutive years in which the price of gold has risen.

But what of possible future attacks? Such attacks almost certainly won’t take the form of the September 11th attacks. The article linked below examines the possibility and possible fallout from a cyberattack targeting America’s financial system. Such a scenario is not nearly as far-fetched as some would have us believe. The article comes from Rachel Ehrenfeld, a noted expert who heads the Economic Warfare Institute.

The U.S. financial industry, supposedly one of the most closely monitored sectors of our economy, remains susceptible to serious threats. Not all from the outside, either. While the streets will not be littered with bodies, when elements of our financial infrastructure – the monetary system, various exchanges – come under attack, the U.S. economy – and the world’s economy–could be severely damaged and millions of people devastated. Smaller attacks are already being carried out incrementally, yet rarely detected, periodically bleeding the market. The reaction, or lack thereof, leaves the stock market open to an overwhelming attack that is likely to leave the U.S. economy in dire straits for years.


Our financial markets’ vulnerabilities are well-known to those intent on sabotage. Despite an awareness of such threats, the nation’s tools for early identification of financial threats remain limited, as the latest survey of IT security executives concluded. These represented 100 companies and organizations with more than $100 million in annual revenue. Moreover, even when detected, financial-industry cyber attacks go underreported, or unreported, because officials are reluctant to divulge information that could prevent further losses.

The threat of a mega attack on the financial markets, a major factor in America’s economic stability, is very real. Crash attacks via high-frequency trading would further cripple investors’ confidence in U.S. financial markets and destroy America’s economy for many years. The present stagnant economy and the uncertainties associated with this year’s presidential elections could be a tempting opportunity to create an economic “perfect storm” that the U.S. is currently incapable of preventing.


In the event of such a horrific cyber attack on the US financial system, investors will need safe haven investments. But it will be too late if you do not already own safe haven investments ahead of time.

That’s why every investor needs to devote a portion of his or her wealth to gold investments. Only gold is real and not subject to being erased by a keystroke…

Gold Soars as Stocks Come Down

June 26, 2012

Worries about came back to haunt stock markets on Monday as the price of gold soared due to safe haven buying.

Fresh concerns that the economic and financial situation in Europe is deteriorating slammed world stock markets on Monday. Stock markets in China, Japan, Germany and London were all down sharply. The Euro Stoxx 50, an index of European blue chips, fell by 2.6% during the day’s session.

The carnage washed up on American shores as well. The Dow Jones Industrial Average fell 138 points, or 1.1%, the Standard & Poor’s 500 finished 21 points lower, or 1.6% and the NASDAQ was down 56 points, or a full 2%, at the close.

Gold was decidedly higher amidst all the chaos, rising more than $15 per ounce to $1,588.00.

This was classic safe haven buying of gold. Despite the fact that the dollar was higher against the euro, one of its chief rivals, and despite the fact that one of the key indicators of inflation, the price of oil, has been declining precipitously, gold still rallied.

When investors have seemingly no place to turn, gold always stands out as the clear choice.

This vividly demonstrates the true independence of the gold market, and why gold has been considered a safe haven for 5,000 years. Against the continued backdrop of uncertainty and crisis in Europe, gold is once again providing vital security, rising while stocks are falling.

To learn more about the benefits of owning gold, contact Coin Trader today at (866) 603-1938.

CNBC: US Is Coming Off Stimulus Induced High

May 3, 2012

This video is everything we have attempted to make our clients aware that is fundamentally wrong with our current printing press economy. Peter Schiff CEO, Euro Pacific Capital tells CNBC the U.S. economy is coming off a stimulus induced high. He goes on to forecast the collapse of the US Dollar along with the oncoming hyper-inflation. You will find he recommends Gold as an asset to hold during the coming collapse.  See more below:

WSJ: In War Against Iran, U.S. Firepower Would Vie With Guerrilla Tactics

April 16, 2012

As concerns grow over Iran's nuclear program, the U.S. is beginning to develop a plan in the event that military intervention is necessary. Reports WSJ's Nathan Hodge, Iran has an inferior military that, in many ways, could make it more dangerous.


Adm. Jonathan Greenert made an important observation last fall from the tower of the aircraft carrier USS John C. Stennis while in the Strait of Hormuz on the southern coast ofIran, the world’s busiest oil-shipping lane.

The chief of naval operations was sailing in a flotilla that showed off the Navy’s overwhelming power to strike at long distances: F-18 fighter jets, Tomahawk cruise missiles and deck guns able to fire a shell 15 miles.

As concerns grow overIran’s nuclear program, theU.S.is beginning to develop a plan in the event that military intervention is necessary. Reports WSJ’s NathanHodge,Iranhas an inferior military that, in many ways, could make it more dangerous.

Yet in the claustrophobic waters of the strait, which narrows to just 24 miles, Adm. Greenert noted that all that long-range firepower could potentially be countered by the Iranian patrol boats that came out to track the U.S. warships. Faced with a fight in close quarters, Adm. Greenert told a Senate panel recently, “You also may need a sawed-off shotgun.”

As theU.S.and other Western powers prepare to meet Saturday inIstanbulwithIranto resume negotiations over its nuclear program, theU.S.military is sharpening its contingency planning. Advocates of peaceful engagement say economic sanctions against the Islamic regime are starting to bite, and are hopeful thatTehranwill give up its uranium-enrichment program.Iransays the program is for use in electricity generation, but intelligence services say the regime is close to developing the capability of building a nuclear weapon. The Obama administration plays down the chances of a breakthrough at this meeting, the first face-to-face encounter between US. and Iranian diplomats in more than a year, saying the best outcome may be agreement for a second round.

Should all else fail and the U.S. or Israel decide to attack Iran, say analysts, they would face a miniature version of the U.S. military, circa 1975—sustained, barely, by a world-wide spare-parts bazaar. Experts say the Islamic Republic’s claims of advanced weaponry—such as armed, Predator-style drones—are mere boasts.

Spotlight onIran

Take a look at key dates in the U.S.-Iran relationship and recent international sanctions, details on major players, a map of major nuclear sites, and possible naval strategies.

Military officers and defense analysts say theU.S.could quickly overwhelmIran’s air defenses, leaving evenly spaced bomb craters, for example, on runways to disable Iranian air bases. Pinpoint airstrikes would attempt to destroy allIran’s known nuclear facilities—a goal complicated by the fact that the regime has buried some of its production sites. The Pentagon is rushing to upgrade its largest conventional bomb to better penetrate fortified underground facilities.

Naval officers believeIranwould retaliate by waging the naval equivalent of guerrilla warfare in the Persian Gulf by mining the Strait of Hormuz or swarmingU.S.naval vessels with small boats.

Such threats, so-called asymmetric warfare, could prove as dangerous and unpredictable as roadside bombs inAfghanistanorIraq, with an low-cost mine potentially crippling or sinking a billion-dollar warship.

In such a scenario, theU.S.military would face a time-consuming and often perilous effort to reopen shipping lanes to international oil traffic.

“They have stayed true to their stripes,” said a senior military officer in theMiddle East. “They have always taken an asymmetric approach, going back to the ’80s.”

Before the 1979 Islamic Revolution,Iranhad among the most formidable conventional arsenals in the region, equipped with modern weaponry sold to the Shah byU.S.defense firms.

Iran’s military was later battered during eight years of war withIraqin the 1980s.Iranhas since cobbled together an array of weapons—some homegrown but much acquired fromChina,North Koreaand the formerSoviet Union.

Plane captains stood by as aU.S.helicopter took off from the flight deck of the aircraft carrier USS Abraham Lincoln in theStraitofHurmuzin February.

Iranhas already threatened to block theStrait of Hormuzin response to tighter international sanctions. Military analysts now estimateIranhas amassed as many as 5,000 naval mines, ranging from rudimentary devices that explode on contact, to high-tech mines that, tethered to the sea floor, can identify the acoustic signature of specific types of ships and explode only under the richest targets.

Scott Truver, a mine warfare analyst, said finding and clearing Iranian mines would be a cat-and-mouse game for the Navy. Mine warfare, he said “is as tough and dangerous as the IEDs on land were. Mines are equally hard to detect, if not harder.”

The U.S. Navy knows firsthand. In April 1988, the frigate USS Samuel B. Roberts struck an Iranian mine, which blew a hole the size of a pickup truck in the hull, and nearly sank the ship. TheU.S.retaliated by attacking two Iranian oil platforms and sinking several Iranian vessels.

Among the newest threats are sophisticated torpedoesIranacquired fromRussiathat can home in on the turbulence of a ship’s wake and aren’t easily fooled by the decoys commonly used by warships.

Military planners worry about torpedoes launched fromIran’s three Russian-built Kilo submarines, as well as approximately four North Korean Yono-class mini-submarines, the class of vessel that sank a South Korean warship in 2010, killing 46 sailors.

Iran’s mini-subs cannot range far or stay long under water. But in the close quarters of theStrait of Hormuz, they could be easily positioned for attacks.

Iranalso is known for its fleet of hundreds of small speedboats that can carry everything from machine guns to large antiship missiles. While a single speedboat may not imperil a warship, a swarm of small boats could overwhelm a larger ship’s defenses. In early 2008, a cluster of Iranian patrol boats sailed close to a convoy ofU.S.warships. No shots were fired, but the provocation underscored potential dangers.

Conventional naval vessels aren’t the only concern.Irancan deploy mines or even missiles from merchant vessels, or dhows. Such threats would be nearly impossible to spot in the crowded shipping lanes of thePersian Gulf.

Ten years ago, the Rumsfeld-era Pentagon held a top-secret war game to test aPersian Gulfscenario. A maverick Marine Corps general, Lt. Gen. Paul Van Riper, led the “Red Team,” the fictional Iranian adversary. Gen. Van Riper relayed orders to his front-line troops by motorcycle messenger, so theU.S.could not hack into his networks; he sent out speedboats armed with missiles and explosives to swarmU.S.warships. After the fictional smoke cleared, more than a dozenU.S.warships were at the bottom of thePersian Gulf.

That exercise, known as Millennium Challenge, was a wake-up call about the potential of asymmetric warfare. The Navy has since unveiled plans to boost the defenses of its ships in the Gulf.

Adm. Greenert said the Navy is interested in new robotic underwater vehicles that can search for mines and submarines and improved Gatling guns to counter Iranian small-boat attacks. The Navy has rushed to test and field a new anti-torpedo torpedo—a weapon that would potentially counterIran’s more sophisticated torpedoes.

The Navy recently announced plans to double its fleet of Avenger-class minesweeping ships in thePersian Gulf.

TheU.S.military is taking other steps. Earlier this year, the Pentagon unveiled plans to refit a transport ship as a staging platform for different kinds of missions, from countering mines to launching remotely piloted aircraft. It also could be used as a platform for launching commando operations with small patrol boats to intercept Iranian vessels, escort ships or protect oil platforms.

Beyond the waters of the Persian Gulf, military planners worry aboutIran’s expanding arsenal of ballistic missiles, built with North Korean cooperation and know-how. The Defense Department estimatesIranhas around 1,000 short- and long-range missiles that can travel from 90 to 1,200 miles, the largest inventory in theMiddle East.

The longer-range Shahab-3, which could reachIsrael, has received the most attention. ButIran’s shorter-range Scuds are on mobile platforms, allowing them to more easily evade detection.

Within striking distance of Iranian missiles are U.S. Army installations inKuwait, a command post inQatar, and the U.S. Fifth Fleet inBahrain.

While relatively inaccurate, those missiles may have the potential to strike panic or provoke a wider war if they hitU.S.allies in the region. A retired Navy officer said the missiles don’t have sophisticated targeting but could score a blind hit on a Saudi oil field, a Qatari gas production facility or a city in theUnited Arab Emirates. “Face it, how accurate does it need to be?” he said.

Officials withIran’s elite Revolutionary Guards threaten reprisals against any country used as a launch pad for strikes againstIran. A conflict withIran, then, could be a real-world test forU.S.missile-defense plans. As part of a shift from Bush-era missile defense, which focused on defendingU.S.territory from a long-range missile attack, the Obama administration has sought defenses against shorter-range Iranian missiles targetingU.S.troops overseas, as well as allies.

There is also a presumed terror threat.Iran’s Ministry of Intelligence and Security could activate so-called sleeper agents for acts of sabotage or terror attacks, according toU.S.officials. Militants sponsored or trained byIranmight attackU.S.diplomatic facilities inIraqor bases in theMiddle East.

“The assumption is that there are sleeper cells all around that would be activated in some way,” said retired Marine Corps Gen. Anthony Zinni, the former head of U.S. Central Command, theU.S.military headquarters that oversees the region.

Military professionals generally agree thatU.S.forces would quickly overwhelmIran’s air defenses. Former Air Force Chief of Staff Gen. T. Michael Moseley, an architect of the shock-and-awe air campaign against Saddam Hussein in 2003, said aU.S.air campaign could inflict “a sense of strategic paralysis” onIran’s air defenses by targeting command-and-control facilities, early warning radars and airfields.

But, Gen. Moseley said, Iran’s air-defense system—comprised of mostly older U.S. Hawk missiles and some surface-to-air missiles of Soviet design—was “not a trivial” threat to U.S. aircraft. “Anything that shoots at you merits some respect,” he said.

Military officials saidIran’s forces shouldn’t be entirely discounted. In the late 1970s, the Iranians “had all the latest and greatest stuff” from theU.S., said Richard Brown, a Navy fighter pilot who helped train Iranian aviators inIsfahan.

Iranmaintains a fleet of Vietnam-era F-4 and F-5 jets, according to defense analysts; its helicopter fleet, which includes versions of the Chinook, the Cobra and the Huey, would look familiar to aU.S.military veteran.

It still flies the F-14 Tomcat, made popular in the movie “Top Gun.”Iranwas the only foreign military customer for the F-14, once a high-endU.S.fighter.

Today, many of these aircraft are close to the end of their service life. Aviation experts sayIrankeeps them airworthy by cannibalizing and reverse-engineering spare parts.Iranbought nearly 80 of the F-14s. Analysts believe around 25 can still fly. By comparison,Saudi Arabia’s fleet of U.S.-made F-15 fighters outnumbersIran’s F-14s by about six to one.

Veterans of the 1970s training programs inIrandoubt the Iranians have maintained enough parts to keep its U.S.-made aircraft in flying condition. Ric Morrow, a naval aviator who worked on the Iranian F-14 training program, said what remained of the Iranian air force would be “no contest” for theU.S.

The air-to-air weapons built forIran’s aircraft also may have outlived their shelf life. Steve Zaloga, a missile expert at the Teal Group, a defense consultancy, said the solid rocket motors and batteries go bad over time.

Some evidence suggests, however, thatIranoperates a global procurement network to buy spareU.S.military parts. Since 2007, the U.S. Justice Department has handled more than two dozen export and embargo-related criminal prosecutions related to military spare parts destined forIran.

Clif Burns, an export attorney at the law firmBryanCaveinWashington,D.C., tracks such cases. He saidIranappeared to give shopping lists to independent contractors who buy parts in the world’s aviation market. “The procurement effort is pretty large and enforcement alone isn’t able to stop the flow of aircraft parts intoIran,” he said.

—Jay Solomon contributed to this article.

Write to Nathan Hodge at nathan.hodge@wsj.com


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