The Debts of the Lenders: Japanese Gold Fever

Goldbugs, I have a special story for you.

March 23 (Bloomberg) -- Young Japanese retail investors are turning to gold purchasing plans at an unprecedented rate as they seek to protect their finances amid a deepening recession, an official at the nation’s largest bullion retailer said.

“We’ve never seen anything like this,” said Noriyuki Abe, an executive at the precious metals division of Tanaka Kikinzoku Kogyo K.K. The company has signed up more than 4,000 customers a month for its gold accumulation plan since October. Previously “the tally wouldn’t exceed 1,000,” he said in an interview.

Financial turmoil has boosted bullion demand worldwide, increasing sales of Austrian Philharmonic gold coins and driving holdings to all-time highs in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal. Rising interest in long-term investment plans by customers in Japan aged from 20 to 40 “stood out,” according to Abe at Tanaka Kikinzoku.

Japanese people in their twenties have shown “stronger tendencies to save money” over the past two years, according to surveys by advertising agency Hakuhodo DY Holdings Inc. “They don’t own cars because they are expensive to maintain, don’t drink much, and don’t go on trips abroad,” said Yohei Harada, a researcher at Hakuhodo’s research and development division.

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