Investors worldwide are buying gold. No surprise, as portfolios are seriously damaged given the bloodbath created in broad markets in the first months of 2016.
Since February of 2016, U.S.-based funds have invested most in precious metals. After the Brexit, those funds added $2 billion, according to Reuters. SPDR Gold Shares was especially popular, taking in $1.4 billion over the week, while U.S. Treasury funds reeled in $864 million.
“Fund investors bid up gold and other precious metals prices during the seven-day period ended July 6 as markets took cover following Britain’s June 23 vote to exit the European Union, a process often referred to as Brexit.”
Even more interesting is the latest trend among Japanese investors. They are not only flocking to gold, but they are buying and storing particularly in Switzerland. That is because of continued negative interest rates and fears of currency depreciation as “the government grapples with the heaviest public debt burden in the developed world,” according to Bloomberg.
In the first six months of 2016, Japanese investors spent 62% more on buying gold in Switzerland compared to the same period in 2015. Japanese investors are truly concerned about the economic and financial future of their country, given the unprecedented monetary policies of their central bank, leading to a continued plunge in their currency.
Bloomberg released the following chart which reflects how horrible Japanese interest rates are (10-Year government bond yields). The chart also shows Swiss interest rates which over the long term follows the same path as Germany’s yields. The big difference between Japan and Switzerland, however, is that the Bank Of Japan has a balance sheet that truly exploded in recent years, which, combined with a continued Japanese currency, is a recipe for future turmoil.
These data points prove yet another time that, if anything, gold remains the go-to safe haven asset. Moreover, probably more interesting for Mountain Vision readers, Switzerland has clearly not lost its luster when it comes to ultra-safe storage.-----