The Lesson Precious Metals Investors Can Learn From Japan

04-03-2011 • Seeking Alpha

It feels a little callous writing about Japan with respect to precious metals after the country suffered such a terrible tragedy. However, I think it’s worth discussing because there’s a lesson in it for all of us. In fact, I think the moral could be couched in terms of a warning. Japan’s Background with Precious Metals It’s commonly known in Japanese culture that citizens harbor gold to protect against unforeseen events. The gold isn’t sold unless it’s needed for an emergency. With respect to the Japanese government, the country’s central bank is the 8th largest holder of the metal (including the IMF and SPDR Gold Trust ETF (GLD)). Beyond investment, Japan represents about 6% of worldwide gold fabrication (excluding investment demand), the majority of which is in electronics. Scrap recycling has been heavy in recent years, while jewelry demand is low. Regarding silver, the tiny island represents about 9% of global demand. Industrial uses comprise the biggest part of that, whi