Gold hit a high of 850 dollars an ounce in the 1980’s and averaged 418.50 during the following decade, according to Bloomberg data. However, in the 2011 gold hot, consumers had come to sell their gold jewelry bought in the past in exchange for cash.
“More and more people who bought gold and jewelry in the 1980’s and 1990’s are selling back what they purchased,” said Kotaro Horita, who trades precious metals at Mitsubishi Materials Corp. which has a hundred years of history and enjoys a good reputation among the Japanese consumers.
The reason? Japan is planning to increase its export of gold to Southeast Asia, especially China, he added.
Looking at the average price of gold, most of the time in the past 20 years was a bit miserable. In 1990, gold was down to 639.92 dollars per ounce from 1,625.52 per ounce 10 years ago, when it was basically regarded as the bottom. But it further went down to 352.29 dollars in 2000.
Truly out of the gold price continued falling and rising, an important cause is Indian and China's growing spending power.
From a statistical point of view, American gold consumption in 2010 was 128.6 tons, only one third of 389.3 tons in 2001. Japanese consumption during this period reduced from 38.3 tons to 18.5 tons, half of less than 10 years ago, while gold consumptions in China and India continued to grow.
China's rapid economic development has completely changed the lonely sight of the gold market over the years. Its consumption was 203.1 tons in 2001; and in 2010 the figure doubled to 451.8 tons.
On the other hand, in 2001, China's gold production was 192.8 tons, then rose up to 350.9 tons in 2010, which was a great growth. Even so, from the point view of consumption, there was still a considerable distance each year and a need to import one hundred tons of gold.
The extremely strong gold sales have enhanced interest of Japanese companies and research institutions in the Chinese market.
A foreign-funded enterprise producing gold threads in China has been smiling for a bull market of gold. Ten years ago, the company invested and built factories in China. While several other Japanese companies left China for different reasons, the company was indomitable and welcomed in a hot gold market in the past few years. "We buy gold, after a few months, without waiting for processing into gold thread, the prices go up, and we really do not have to worry," the company's sales staff said.
The paradox is that Japan is probably the only country which massively exports gold without being a producer, experts say.
“Japan is the only country that exports gold without being a major producer,” said Bruce Ikemizu, the manager of Standard Bank Plc.’s Tokyo branch. None of the 7.5 tons of the metal that’s extracted annually from the Hishikari Mine in Kagoshima, southern Japan, is exported, according to Sumitomo Metal Mining Co., the country’s top nickel producer and the operator of the nation’s only operational gold mine.
Sumitomo Corp. spends “several billion yen a day” at peak times to purchase recyclable gold products for shipment to foreign smelters, Koichi Iwanaga, general manager of the commodity business department, said.
“Countries that are buying up gold are places where real interest rates are negative,” said Itsuo Toshima, an independent analyst who has researched global markets including gold for about 30 years and was formerly the Japan director of the World Gold Council.
In China, the biggest gold jewelry consumer, inflation is eroding the value of bank deposits, prompting investors to seek returns in bullion. Gold makes up 1.6 percent of China’s foreign-currency reserves, compared with the 11 percent world average, Nicholas Brooks of ETF Securities said.
Also, Kobe Asahi Brick Company has decided to enter the waste electronics recycling field. “30% of gold productions come from the electronics industry. Gold content in used mobile phones and integrated circuits is much more than the ordinary ore, easily recovered," the company official said.
Precious metals in circulation enterprises have action too. In November 2011, Nagahori Jewelry (Shenzhen) Trading Co., Ltd. was officially opened in Luohu District, Shenzhen, which is a company specialized in production and sales of precious metal jewelry. General manager Nagahori Keita said: "our accumulated technology in the Japanese market is ready to re-open up new markets in China."