This March, gold sales have jumped up in Japan as negative interest rates set the stage for higher inflation. Here at Vaultoro.com we have also noticed a 13% increase in trading from Japan. Japanese savers and investors have flooded towards gold as a safe heaven after the Japanese central bank made a move to set interest rates into the negative. This move further signals that global central banking’s last ditch effort to stimulate economies by keeping borrowing costs low is pumping demand for a government and central bank independent store of value. Gold, with its 3000+ years of being a globally recognised store of value, decentralised mining, and historical stability is a natural choice for people wanting to secure their savings and hedge themselves against the inevitable inflation that comes with printing money to no end.
Tanaka Kikinzoku Kogyo K.K, one of Japans largest gold retailers, said in a statement yesterday that the sales of Gold bars jumped 35% to 8,192 Kilos in the first three months of 2016 compared to the same period in 2015.
Takahiro Ito, chief manager at Tanaka Kikinzoku Kogyo K.K.’s store in Tokyo’s Ginza shopping district, said
“Many customers are wagering that it’s better to turn their savings into gold as a safe asset rather than deposit money at banks that only offer low-interest rates,”
Central banks in about 24 countries have dropped interest rates below zero and many more have been busy convincing their respective governments and regulators to not only drop interest rates below zero but also make it legal to impose a bail-ins on retail banks. A bail-in is what happened in Greece where banks shut their doors, steal a percentage of money from their customers to “rescue” the economy.
Negative interest rates are a relatively new phenomenon in central banking and the hope is to stimulate lending. Japan has now joined the European Central Bank along with Sweden, Denmark and Switzerland in setting their interest rates below zero.
Having low or negative interest rates raises the appeal of gold bullion as in normal circumstances gold is not an asset that bears interest.
Europeans have learned from the past and are also buying the yellow metal as a haven in the fear that negative interest will negatively affect the already quivering European economy.
Throughout history, during periods of low-interest rates (not even negative) peoples gold returns typically more than doubled their long-term average.
According to The World Gold Council, in a report released in March. “Over the long run, negative interest rate policies may result in structurally higher demand for gold from central banks and investors alike.”
So where are we now? Well, Gold is up 16% in the first three months of 2016, its best quarter in three decades. The US Fed is also sticking to low-interest rates and has delayed its plans to increase rates indefinitely.
At mid-Friday the 14th of April, Gold on the bitcoin gold market place Vaultoro.com is trading at
0.0933 BTC per gram ($39.60 USD/gram, $1,232.68 USD/oz)