Gold purchases in Japan are up over 500% this month, as investors scramble to buy physical assets ahead of the first Federal sales tax hike in 17 years.
The Financial Times reports that buyers are lining up for hours outside gold retailers, grabbing as much gold as they can before the national sales tax jumps from 5% to 8%. They note that the price drop this week is adding to expectations of buyers of turning a profit after prices recover and the 3% sales tax hike takes effect.
It isn't only people with a short-term mindset buying while the buying is good, however. A middle-aged Japanese broker told the reporter that the tax increase represented a “good opportunity” to buy more gold as he was worried about holding too many yen-denominated assets.
“I plan to hold it for a long time until there is a good time to sell, when the yen collapses or something,” he said.
Reuters also reports on the spike in physical gold sales, citing an official at Japan's largest precious metals retailer:
"We are seeing the general public buy more gold ahead of the consumption tax increase. We are seeing some buying in platinum as well but not as big as gold." said Kate Harada, general manager of precious metals division at Tanaka Kikinzoku Kogyo.
They go on to say Japanese gold prices were at a premium of about $1 an ounce to spot prices, versus flat to a 25 cents premium last week. The Tokyo Commodity Exchange has seen physical deliveries of gold jump to the highest levels since 2007 in both February and December.