'Japan says to cautiously consider gold in reserves'

[Petrodollar Warfare]

This is an interesting bit of news...

Japan says to cautiously consider gold in reserves
Wed January 28, 2004 07:49 AM ET

TOKYO, Jan 28 (Reuters) - Japanese Finance Minister Sadakazu Tanigaki
said on Wednesday he wanted to carefully consider whether to change the weighting of gold in Japan's foreign reserves. Tanigaki told a parliamentary committee he thought it necessary to take a standpoint of diversifying assets in Japan's foreign reserves, which are mostly made up of dollar-denominated assets.

Asked about gold, he said he would think about it carefully.

"There are various discussions about the positioning of gold in foreign reserves, even among...currency authorities," Tanigaki said.

"If I say something too simply, I think there could be a large effect on gold markets...so I would like to consider it carefully," he said.

Japan's official reserves amounted to a record high $673.529 billion at the end of December, up from $644.569 billion a month earlier, the
Ministry of Finance said this month. Included in that amount were gold stocks which stood at $10.241 billion at the end of December, up from $9.80 billion a month earlier.

C Reuters 2004. All Rights Reserved.

[54anickel]

1. That explains the gold rally today.

Wondered what was up as the dollar was pretty flat. But, then the Fed talked about rates, pushing the dollar up and gold down. Be interesting to see what it does overnight.

[junker]

2. no, the gold rally actually was well in place when this came out...but

note that this goes along with the line-in-the-sand stop the intervention for BOJ at probably 105.99

Now it means that dollar goes bye-bye.

[Art_from_Ark]

3. It might be a gold rally in dollar terms

but in yen terms, gold is now at about the same level as its September average. And so far today, the Japanese market has reacted by raising the gold price a whopping 2 yen per gram (60 cents/ounce).

[54anickel]

5. Yes, I've seen this reported, that gold's "run" is not reflected in

other currencies, but I have a hard time grasping that concept. I look at the chart for say the yen and obviously you have the same movement on the graph, conver the yen price and it comes out the same. Or is it the percentage of change that they say is not the same in other currencies. I don't get it. :shrug:

[Art_from_Ark]

7. Regarding recent yen vs. gold movements,

it is the percentage of change that is not the same. It wasn't too long ago that gold was below $300, but it rose to $420 recently. During the same time, the yen price movement was only about $60/ounce, and that is with a strong yen. The actual difference between peak and trough in yen terms has been a mere 6200 yen increase. But the strong yen has recently been pushing the price of gold down again, back to its September average.

[54anickel]

9. Thanks again ;-)

[54anickel]

4. Yen opened at 105.89, got a huge single spike boost at 2am to

106.61 then gradually slide to 105.48 until around 2pm when Greenspan spoke and the dollar went up.

How do you tie the gold rally to the 105.99? To BoJ intervention?

I'll agree the rally was on since early morning, which would be before the article states it was released, but that doesn't mean the rumor wasn't already out there. Heck, the rally started yesterday as the dollar took a dive.

They have openly stated that 105 was pretty much the level of tolerance. That 2am spike has dollar intervention written all over it, and the dollar did go up a bit at about the same time. If the dollar wouldn't have taken off after Greenspan, they may have made another move tonight.

On edit - NEVER MIND - looked back thru old posts. You're saying that 105 is when BoJ stops buying our debt. I've got it now, stop buying dollars and they've just announced diverifying their reserves.

Sorry Junker, it's late for me, I'm a bit slow tonight. :hangover:

[Art_from_Ark]

6. The single spike boost was for the dollar

The higher the yen figure, the weaker the yen:D

Thus, if the yen suddenly went from 105.89 to 106.61, it (the yen) was actually sliding, not getting a boost. In other words, you would have needed 105.89 to buy one dollar at the beginning of trading, but at 2 p.m. you would have needed almost another yen to buy the same dollar.

At any rate, it does appear that there is resistance at 105 at the present time.

[54anickel]

8. Yes, I understand that part. Think you're answering my question to

Junker. It's the gold value in different currencies that I'm having trouble with. See post 5.

Thanks.

On edit: I see your answer to this. Again - NEVER MIND. My ISP is very slow and I'm messing this thread up pretty bad now.
Time for jammies.

[Frodo]

10. EVERYTHING means "the dollar goes bye-bye" to you Junker

"Look! It's a full moon today!"

Junker - "Now it means that dollar goes bye-bye."

"Darn! I broke a nail"

Junker - "Now it means that dollar goes bye-bye."

"Look at this lovely wedding band my fiancee is giving me"

Junker - "Ahh! Buying gold! Bye-bye Dollar!"



Jan 5, 2003 Junker - "In the month of Jan we will see 900 dollars per ounce gold."

Price of gold on that day? ~$425/oz Today? ~$403/oz (correction - ~$398/oz)


Jan 5, 2003 Junker - "So, be advised that the US dollar as a reserve currency for the planet is dying, and will do a significant amount of that dying in the month of January."

Dollar index on that day? ~86.5 Today? ~87.5



Of course, the month ain't over yet.

[54anickel]

11. Bit of an update to this article.

http://business-times.asia1.com.sg/story/0,4567,106947,00.html
Japan just can't switch to gold - yet


WHETHER a studied statement, an off-the cuff comment or a veiled threat, Japanese Finance Minister Sadakazu Tanigaki's suggestion last week that Japan could diversify part of its huge foreign exchange reserves into gold has had international reverberations.

It has brought home once more the fact that the vast dollar reserves which Japan and the rest of Asia hold are a Sword of Damocles for the dollar and the US Treasury market. The impact of such a move on the dollar would be severe. And as Japan has a third of total US Treasury securities held outside the US, the impact on the bond market would also be severe.

snip>
Asian monetary authorities are working too on laying the foundations for an Asian Bond Market which would provide the infrastructure through which the region could reduce its dependence on the dollar and the US Treasury market, and provide a means for the region to deploy its own savings without channelling them offshore.

snip>
The fact is, however, that at some time the threat of Asian governments running down their colossal dollar holdings (which constitute the bulk of the US$1.9 trillion of official foreign exchange reserves held in Asia) is going to crystallise. It could happen if Japan's economy is moving, as some economists suggest, beyond total export dependence towards a broader-based domestic recovery. Or it could happen if rising US interest rates stall growth and demand for imports. But happen it surely will and reshaping the dangerous structure of mutual dependence between East Asia and the US should be top of the agenda for the G7.

[rapier]

12. notes

I don't take too much stock in this. It's probably just gamesmanship of some sort.

The thing about reserves in the lead post suggests that is Japans gold reserve. That number has to be it's dollar reserves. What the gold stock thing is I have no clue.

Despite Junkers prediction of a dollar collapse I belive that all the worlds central bankers would fight to the death to prevent a dollar meldown. They all know an erosion is inevitable but a freefall, a dollar collapse, a dollar panic, would unhinge the entire world economic system. Against that prospect they would easily choose the lesser evil of massive currency debasement inherent in using the printing press (now electronic) to print their own currencies to buy and prop the dollar.

The link provides some discussion of the currency situation and metions the gold comment.

http://www.prudentbear.com/internationalperspective.asp

Especially noteworthy in this analysis (off thread I admit) is the comment that there is now no longer any institutional support in the US against inflation just as there is no longer any support for savings. I agree with this.

It goes to show what a weird world we live in. Led by the Fed, the supposed heart of capitalism, the entire establishment is actively seeking inflation and discouraging savings. The low interest rate policy is a defacto discouragement of savings and savers are punnished overtly by the ultra low interest rate regiem. Conversely speculators are rewarded and encouraged. The low interest rates for a considerable period comment just removed from Fed speak was in fact a green light, a guarantee to speculators. So it goes.

[54anickel]

13. Agreed, the entire currency situation has become gamesmanship,

which is what the article I posted tends to suggest. There is also the chatter today about the yen sell options at 105 yen, which is a bit scary when you think about it - all automatic.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=344379#344402
They added that a fall in the dollar beyond 105 yen could trigger an even sharper decline given the huge amount of option positions lined up around that level.

"There are many option triggers below 105 yen because people thought in the past that that level would be protected," said Kota Kimura, assistant manager at Shinkin Central Bank.


Thanks for the link, interesting viewpoints.