“The pension money invested in bullion is ‘peanuts’ … for now”

Today’s AM fix was $ 1,663.50, EUR 1,272.37 and GBP 1,035.35 per ounce.
Yesterday’s AM fix was $ 1,653.75, EUR 1,261.06 and GBP 1,028.07 per ounce.

Silver is trading at $ 30.40 / oz, € 23.39 / oz and £ 19.04 / oz. Platinum trades at $ 1,591.50 / oz, palladium at $ 679.00 / oz, and rhodium at $ 1,150 / oz.

Gold climbed $ 11.80 or 0.72% in New York yesterday and closed at $ 1,658.20 / oz. Silver hit a high of $ 30,534 and ended with a gain of 0.73%.

Cross Currency Table – (Bloomberg)

Gold hovers around $ 1,660 / oz on Wednesday as investors await policy decisions from the Bank of Japan and the European Central Bank tomorrow as physical purchases accelerate in Asia.

Gold fell last week after investors were spooked by the US Fed’s minutes, which heightened concerns about quantitative easing.

Yesterday, premiums on gold shipments to India hit their highest level in two months as traders rushed to place metal orders ahead of a possible increase in import duties.

The iShares Silver Trust, the world’s largest silver-backed ETF, reached 10,112.22 tonnes on January 7, the highest since May 2011.

Bloomberg announced yesterday that Japanese pension funds, the second largest pool of pension assets in the world after the United States, will more than double their holdings of gold over the next two years as the new government pushes for a higher inflation target, according to a fund advisor.

XAU / JPY, 1 year – (Bloomberg)

Gold in Japanese currency hit a record 147,780 yen an ounce on the first New Year’s trading day, Jan. 2, after climbing 21% last year.

The former World Gold Council representative in Tokyo expects Japanese pension funds to likely double their investments in gold-backed ETPs to 100 billion yen by 2015. Assets held by the funds pension in gold-backed exchange traded products could reach 100 billion yen ($ 1.1 billion) by 2015, up from less than 45 billion yen today, said Itsuo Toshima, who represented the Tokyo office of the World Gold Council for 23 years until 2011.

XAU / JPY, quarterly – (Bloomberg)

New Prime Minister Shinzo Abe’s pledge to bring inflation down to 2% when the yen appreciates end means Japanese pension funds must now hedge against rising prices and a falling currency after two decades of stagnation.

Japanese pension funds are set to diversify some of their massive holdings, worth nearly $ 3.4 trillion into gold ingots.

According to the Daiwa Institute of Research, corporate pension funds in Japan will diversify their assets to 72 trillion yen after domestic stocks have produced little return for the past two decades.

“Bullion’s role as an inflation hedge, long ignored by Japanese fund operators, has come to light thanks to Abe’s economic policy,” said Toshima, who now works as an advisor to operators. pension fund, in an interview today in Tokyo.

“Gold may be a standard asset class in the Japanese pension fund portfolio as Abe’s target is met.”

Nikkei Index, quarterly – (Bloomberg)

“The pension money invested in bullion is ‘peanuts’ right now,” Toshima said. “If 1% of their total assets moved to metal, the gold market would explode.”

As Japanese pension funds transition to the yellow metal, many pension funds internationally will follow – both corporate and state.

While pension funds manage assets internationally in the trillions, gold remains a tiny market and refined investment grade gold on the surface an even smaller market.