Gold By Country:
2013 Demand: 21.3 tonnes
Jewelry/Coin & Bar: 17.6 tonnes/3.7 tonnes
Reserves: 765.2 tonnes
% of Total Forex Reserves: 2.71%
2013 GDP: $5.01 trillion
The Japanese economy has been stuck in a state of frustrating stagnation for the majority of the last two decades. Massive public debt, totaling more than 2 times the country’s annual GDP, has stifled economic growth to a painfully low average of 1.5% annually since the crash of the Japanese Asset Bubble in the early 90s. In a recent effort to curb public debt and consumption, the Japanese government has introduced “Abenomics,” an economic policy that will increase government stimulus spending as well as double consumption taxes from 5% to 10% over a two year period, ending in 2015. The stated goal of this fiscal policy by the Japanese government is to raise revenues to pay down the national debt, as well as deliberately increase inflation. The effect thus far is that the people of Japan have increased their gold purchases by more than 400% in the month preceding the initial tax increase from 5% to 8%, in hopes of hedging themselves against the planned inflationary period ahead.
Japan has held nearly the same amount of foreign reserves in the form of gold for more than 20 years, with only fractional tonnage changes from year to year. Currently, the government of Japan is engaging very deliberate actions to expand the monetary base, and increase inflation, in an effort to climb out of the massive relative debt the country has accumulated since the asset bubble of the early 1990s. It is unlikely that the central government will make much effort to increase their reserve ratios, since they are actively pursuing inflation of the yen.
The biggest domestic Japanese gold mining company is Sumitomo, which operates the largest mine in the country, the Hishikari gold mine. Located some 620 miles west of the capital city of Tokyo, the Hishikari mine has produced about 165 metric tons of gold since its opening in 1985. Tanaka Kikinzoku Kogyo K.K is Japan’s largest retail bullion dealer. While Japanese citizens have traditionally had low demand for bullion products, such as coins and bars, Tanaka has reported huge year-on-year increases so far in 2014, in large part due to the inflationary policies that have been unabashedly propagated by the liberal central government, known as Abenomics.
In 2013, the people of Japan demanded a relatively meager 3.7 tonnes of gold in the form of coins and bars. However, sales on coins and bars for the first four months of 2014 saw more than double the sales for the same period in the previous year, due to imminent consumption tax increases. Stoked by the Japanese government's deliberate efforts to increase inflation, the Japanese people are scrambling to hedge themselves against the oncoming debasement of the yen.
Did You Know?
In Japan, the art of Kintsugi (Japanese for “golden joinery”), sometimes alternately known as Kintsukuroi (Japanese for “golden repair”) is a time-honored tradition of mending broken objects with lacquer resin that has been dusted with powdered gold. Lacquerware has long been an important Japanese art form that became popular in France during the 18th century. Kintsugi is also partly a philosophy, emphasizing that the evidence of repair tells the “history” of an object, and should not be hidden but instead highlighted with gold. When Kintsugi was first employed, it became so desirable that some were rumored to purposely destroy valuables in order to have them repaired with Kintsugi techniques. Japan also has a rather rich history of producing gold coinage as well. The koban, is an oval shaped coin that was produced until the mid 19th century. The actual gold content however was not standardized, and usually decreased, making it that the denomination of gold koban were not continuously synonymous with the weight specifications of the coins.