Pension Money Invested In Gold Bullion Is 'Peanuts' ... At The Moment

By: GoldCore

Today’s AM fix was USD 1,663.50, EUR 1,272.37 and GBP 1,035.35 per ounce.
Yesterday’s AM fix was USD 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 is trading 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 surged to a high of $30.534 and finished with a gain of 0.73%.

Cross Currency Table – (Bloomberg)

Gold is hovering near $1,660/oz Wednesday as investors await policy decisions by the Bank of Japan and the European Central Bank -tomorrow, as physical buying picks up in Asia.

Gold tumbled last week after investors were spooked by the U.S. Fed minutes which grew concerns about quantitative easing being toned down.

Yesterday, the premiums on gold shipments to India rose to their highest level in two months as traders rushed to place orders for the metal ahead of a potential rise in import duty.

The iShares Silver Trust, the world's biggest silver-backed ETF, rose to 10,112.22 tonnes on January 7th, the highest since May 2011.

Bloomberg reported yesterday that Japanese pension funds, the world’s second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the new government pushes for a higher inflation target, according to an adviser to the funds.

XAU/JPY, 1 Year – (Bloomberg)

Gold in Japan’s currency reached a record 147,780 yen an ounce on the first day of trading in the New Year - January 2nd, after climbing 21% last year.

The World Gold Council's former Tokyo representative expects that Japanese pension funds will likely double their investments in gold-backed ETPs to 100 billion yen by 2015. Assets held by Japanese pension funds in gold-backed exchange-traded products may expand to 100 billion yen ($1.1 billion) by 2015 from less than 45 billion yen at present, said Itsuo Toshima, who represented the Tokyo office of World Gold Council for 23 years through 2011.

XAU/JPY, Quarterly – (Bloomberg)

New Prime Minister Shinzo Abe’s pledge to spur inflation to 2 percent at the end of the yen’s appreciation means Japanese pension funds now have to hedge against rising prices and a currency decline after two decades of stagnation.

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

Corporate pension funds in Japan will diversify 72 trillion yen in assets after domestic stocks produced little return in the past two decades, according to Daiwa Institute of Research.

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

“Gold may be a standard asset-class in the portfolio of Japanese pension funds as Abe’s target is realized.”

Nikkei Index, Quarterly – (Bloomberg)

“Pension money invested in bullion is ‘peanuts’ at the moment,” Toshima said. “If 1 percent of their total assets shift to the metal, the gold market would explode.”

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

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

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Yours sincerely,
Mark O'Byrne
Exective Director

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

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