They say a picture says a thousand words, but one chart, which I’ve reproduced below, says much more than a thousand words, and explains why Japanese should buy gold now. Below, I have drawn an extremely bullish cup and handle pattern, with the high mark of the handle reached on 1 Feb, 2013 at ¥156,621 yen per troy ounce, which has been surpassed with gold trading at ¥161,979 at the start of September, or 3.4% higher than the high mark of the handle (in nominal terms). As long as gold’s price does not fall more than 3.4% against the yen, this breakout from the 40-year cup and handle formation should mark the next leg higher of very strong performance of yen gold prices and provides one of the strongest reasons why Japanese should be buying gold and converting their savings in fiat currency yen to physical gold (coins and bars) if they wish to preserve their savings.
With more than three decades of economic stimulus failure, first marked by ZIRP in the 1990s, and then finally by NIRP (negative interest rate policy) by the start of 2016 under Abenomics, and with certain collapse of the Nikkei 225 to levels under 10,000 without the constant stock purchases of the Bank of Japan (BOJ), these conditions, when combined with the chart above, all scream one conclusion: Japanese should be buying gold now and exchanging fiat currency yen for gold if they want to preserve their wealth. I’m not stating that gold priced in yen will scream higher this week, but for a long-term wealth preservation strategy, every Japanese should be buying gold as a key pillar of this strategy.
Furthermore, if the JPY:USD ration crosses 0.96, and stays above this level, for those looking for a signal of when to expect the upward trend of gold in yen prices to continue, this would be a decent predictive indicator. For those that are fooled by BOJ Governor Haruhiko Kuroda’s laughable statement that he and his fellow Central Bankers are struggling mightily to achieve their targeted 2% inflation rate, know that this is a complete lie, as it would have been impossible for gold, which has always been a historical weathervane for inflation rates, to have risen by nearly 475% in yen prices in less than two decades if real inflation rates were not much higher than Kuroda’s stated rates of inflation. In fact, the purchasing power of the yen has been destroyed so mightily by BOJ ZIRP and NIRP policies over the past three decades that gold prices in Japan have more than doubled the appreciation of gold prices in Brazil over the last 10 years, though most people would never consider the Japanese yen to be twice as unstable as the Brazilian real. However, if making this assessment using the price appreciation of gold in domestic fiat currencies as the basis, this is the reality that exists.
Having briefly lived in Japan before, I understand how most Japanese citizens tend to believe their government officials to an unfortunate degree. However, I also understand how much Japanese people in general value gold as a wealth preservation asset, especially after the Japanese banking system nearly collapsed in the 1990s. Consequently, I hope that most Japanese citizens act on their knowledge of past monetary Japanese history and continue to convert fiat yen into gold and ignore the insane ramblings of their bankers.
About the author: J.Kim is the Founder and Chief Education Officer of skwealthacademy, a coming revolutionary, disruptive online education academy that focuses on the provision of all essential missing educational components of schooling today such as critical thinking, applied knowledge, business ethics, and the pursuit of meaning through the attainment of life purpose and holistic wealth. Sign up for my weekly newsletter here and subscribe to my new maalamalama YouTube channel here and my maalamalama Instagram here.
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