Japan’s Gold Exports Most Since 1985 as Individuals Sell Jewelry, Bars

Gold shipments from Japan, the world’s third-largest economy, are at the highest level since at least 1985 as individuals who purchased jewelry more than 20 years ago are selling it amid record prices.

Shipments in the 10 months ended October totaled 95.6 metric tons, according to Takahiro Morita, the Japan director of the World Gold Council, who cited Ministry of Finance customs data. The previous high was 95.5 tons in 2008.

Bullion is set for an 11th year of gains as central banks join investors in purchasing the metal to diversify assets. Japan’s largest gold retailer, Tanaka Kikinzoku Kogyo K.K., said it bought 40 percent more bars and jewelry from individuals in the nine-month period ending September. Global gold investment jumped 33 percent to 468.1 tons in the third quarter from a year earlier as bar and coin demand in Europe more than doubled to the most since the fourth quarter of 2008, according to the London-based council, a producer-funded group.

“Japan’s gold exports will reach 100 tons this year,” Morita said in an interview yesterday.

Bullion exports to Thailand tripled and those to Singapore doubled in the 10 months ended October from a year earlier, according to statistics released by Japan’s finance ministry.

“More and more people who bought gold and jewelry in the 1980’s and 1990’s are selling back what they purchased,” said Kotaro Horita, who trades precious metals at Mitsubishi Materials Corp. (5711) in Tokyo. Exports have been increasing to Southeast Asia and China in particular, Horita said.

Gold hit a high of $850 an ounce in the 1980’s and averaged $418.50 during the decade, according to Bloomberg data. Spot gold declined 0.2 percent to $1,738.75 at 4:35 p.m. in Tokyo.

Central Banks

Purchases by central banks, which are adding to reserves for the first time in a generation, may reach 450 tons this year, Marcus Grubb, managing director of investment research at the council, said Nov. 25. Central banks and government institutions bought 142 tons last year, International Monetary Fund data show.

“Japan is the only country that exports gold without being a major producer,” said Bruce Ikemizu, the manager of Standard Bank Plc’s Tokyo branch. None of the 7.5 tons that’s extracted annually from the Hishikari Mine in Kagoshima, southern Japan is exported, according to Sumitomo Metal Mining Co., the country’s top nickel producer and the operator of the nation’s only operational gold mine.

‘Several Billion Yen’

Sumitomo Corp. (8053) spends “several billion yen a day” at peak times to purchase recyclable gold products for shipment to foreign smelters, Koichi Iwanaga, general manager of the commodity business department, said in an interview.

Bullion reached a record $1,921.15 an ounce on Sept. 6 and has been profitable to export even after shipping fees because of “the capacities and cost competitiveness of overseas smelters,” said Iwanaga.

“Countries that are buying up gold are places where real interest rates are negative,” said Itsuo Toshima, an independent analyst who has researched global markets including gold for about 30 years and was formerly the Japan director of the World Gold Council.

In China, the biggest gold-jewelry consumer, inflation is eroding the value of bank deposits, prompting investors to seek returns in bullion. Gold makes up 1.6 percent of China’s foreign-currency reserves, compared with the 11 percent world average, Nicholas Brooks of ETF Securities said Dec. 2.

ETFs

“Central banks are continuing to buy gold exchange-traded funds after concerns arose about the creditworthiness of euro- zone nations,” Koichiro Kamei, managing director at independent research company Market Strategy Institute, said in an interview.

Holdings in bullion-backed exchange-traded funds dropped to 2,356.716 tons yesterday from the all-time high of 2,358.206 tons on Dec. 6, according to Bloomberg data.

The Bank of Korea, which controls the world’s eighth- biggest foreign-exchange reserves, bought gold for the second time this year last month. South Korea purchased 15 tons, boosting holdings to 54.4 tons, Lee Jung, head of the investment strategy team at the bank’s Reserve Management Group, said on Dec. 2.

To contact the reporters on this story: Yasumasa Song in Tokyo at ysong9@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the translator on the story: Taku Kato in Tokyo at tkato6@bloomberg.net

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