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.
http://www.zerohedge.com/news/2012-12-18/japanese-pension-funds-34-trillion-assets-seek-safety-gold
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Gold: Protection from Economic Turmoil and Military Crisis

October 9, 2012

JR Nyquist is a long-time respected observer of world affairs from an economic and financial standpoint. He has been writing on such subjects for some 15 years.

This week he has penned an informative analysis of various crises that are simmering around the world which could have a profound impact on the world economy and financial markets.

Paper assets provide virtually no protection from these exogenous factors. Gold is the crisis commodity that has historically protected wealth in such scenarios. But it is important that investors stay informed of these factors, which the mainstream media largely ignores…

http://www.financialsense.com/contributors/jr-nyquist/economic-turmoil-and-military-crises


Gold Sharply Higher on News from China, Spain

September 27, 2012

The price of gold surged higher by over $25 per ounce to just under $1,780 on a double dose of news that the market regarded as bullish.

First came the news that China was further embarking on a monetary stimulus plan of its own to try to jump-start its slowing economy. With Europe, the US, China and Japan all printing money at the same time, traders are very bullish on the outlook for gold.

At the same time, Spain announced that it would meet budget deficit targets, an indication that perhaps the worst is over for the Spanish depression.