TOPJapan Sales Tax Hike Sparks Gold Rush

Japan Sales Tax Hike Sparks Gold Rush

By Alec Jordan

Gold buyers in Japan are stocking up on the precious metal as the planned sales tax hike looms ominously closer.

Driven in part by the recent decline in market prices, gold ingot sales gained momentum in the last minute before the 5 percent consumption tax jumps to 8 percent this April.

Precious-metals specialist Tanaka Kikinzoku Jewelry said ingots of 500 grams, which fetch a price of around 2.3 million yen, were the top seller. The company said gold ingot sales volume at seven directly-run stores shot up 380% on the year for the period from March 1 to March 25.

Ishifuku Metal Industry, a Tokyo-based vendor of precious metals, logged an ingot sales surge of 60 percent in March compared with the previous month.

The planned 8 percent consumption tax will apply to gold at the time of sale, prompting investors and buyers to flock to gold at the current rate of 5 percent in hopes of selling it after the hike for a profit equivalent to the 3 percentage point difference.

Retail prices in Japan were at 4,590 yen ($44.42) per gram Wednesday, down from 4,769 yen on March 14.

But the gold rush is not only fueled by short term profits, according to the Nikkei.

“Many are opting to keep their gold for the medium to long term,” a marketing chief at Tanaka Kikinzoku Jewelry said.

“Inflation anxiety and other future concerns are spurring a growing number of people to buy gold as a safe asset,” says Koichiro Kamei, a financial and precious-metals analyst.

Gold investment can be risky since it is susceptible to price swings. Moreover, precious-metals vendors usually set their purchase prices lower than their sale prices.

Gold futures in New York, a benchmark for international prices, slumped 5 percent from its peak on March 14 to around $1,310 per troy ounce.


Image: “Chinese Gold Ingot” by raymondtan85/Flickr