Investment in Precious Metals Increasingly Common in Japan

August 13, 2018

Tokyo- Investment in gold and other precious metals is increasingly common in Japan, with some using them as safe-haven assets or to hedge risks.

Precious metals are assets that are valuable in themselves and different from shares in companies that would become worthless if they go bankrupt.

As the price of gold often moves differently compared with major financial products, some investors use it to diversify their portfolios in order to minimize losses when the prices of stocks and other financial products plunge.

The total net asset value of Mitsubishi UFJ Trust and Banking Corp.'s four Fruit of Gold series exchange-traded funds, which are linked respectively to gold, silver, platinum and palladium, stood at 73.6 billion yen as of Aug. 1, up over 20 times from their listings on the Tokyo Stock Exchange in July 2010.

The value of the gold ETF came to 58.8 billion yen, skyrocketing nearly 30 times from the debut. "The asset value of the gold ETF has been increasing stably, regardless of market conditions," Osamu Hoshi, executive adviser at the trust bank's Frontier Strategy Planning and Support Division, said, indicating that it has been used from a medium- to long-term investment point of view.

In 1982, major Japanese precious metal seller Tanaka Kikinzoku Kogyo K.K. launched the nation's first installment-type gold investment program.

The total number of customers for the program has topped 500,000, with many of them using it as a tool for asset formation, said Eiichiro Kato, head of the company's precious metal retail department. A man in his 30s, for example, started to monthly invest 5,000 yen in gold under the program after marriage, according to Kato.

Tanaka Kikinzoku also offers similar investment programs for platinum and silver.

For gold, investors should take a long-term stance to have a success, financial and precious metal analyst Koichiro Kamei said. Jiji Press