Selling Their Gold? The Japanese Must Be Completely Insane!

I stumbled upon this story today from Reuters about how many Japanese people are selling their gold. It seems that, at today's high prices, they want to cash in while they can.

Because of this trend, this makes Japan a net exporter of gold for six years in a row!


Why would anyone want to sell gold (real money) in exchange for worthless paper? These people selling their gold haven't a clue as to what they are doing. 


Reuters reports in "Analysis: Japanese Cash in on Gold Price Boom":

(Reuters) - For Eriko Ebina, standing outside a downtown Tokyo medical equipment store that has a side business buying gold, the recent surge in prices for the precious metal was just too tempting.

"For more than 30 years, I kept gold jewelry mother bought for me, and with media saying prices are high, I thought I would sell them now except for a few keepsakes from her," said Ebina, in her 60s.

"I earned more than I thought they were worth. I'm not interested in buying gold."

It is sellers like Ebina who will offset surging investment into gold funds in Japan, which should make the country a net exporter for the sixth year in a row.

The assets of Mitsubishi UFJ Trust and Banking Corp's physical gold exchange traded fund (ETF), Japan's first backed by metal stored in the country, have grown by a quarter since end-July to 21.8 billion yen ($284.9 million) as of August 23.

"Investors are seriously treating our gold ETF as a legitimate asset class, just like investing in equities, bonds and currencies," said Osamu Hoshi, deputy general manager at Mitsubishi UFJ Trust.

"They see a need to diversify their assets after seeing volatile moves in currencies and stocks and others," Hoshi said.

There is a serious disconnect here. Hoshi says that people need to diversify their assets, yet they sell their gold? And what do they buy? Stocks? Bonds? Paper currency?! Oh yeah, those have done especially well over these last 20 + some years.

What do they say, "A fool and his money are soon parted."

A downgrade of the U.S. sovereign debt rating amid a deteriorating outlook for the world's largest economy, as well as a spreading European debt crisis, have triggered a rush to gold that has boosted prices by 14 percent this month.

Yeah... For people like this dumb lady who sold her gold, they need to wake up and smell the coffee...She doesn't need to sell her gold, she needs to hold on to it... For those of you who don't have any gold or silver, you need to buy it.

It's the only asset that has done well over these last ten years.