Japanese Precious Metal ETF Assets To Expand: Mitsubishi

The first yen-denominated Japanese gold ETF was launched on July 2nd, and the issuer of it is predicting an eightfold increase in precious metal ETF assets within a year.

ETFs backed by gold, silver, platinum and palladium stored in Japan may hold as much as 30 billion yen ($337 million) in July next year, from the initial 3.5 billion yen, said Osamu Hoshi, deputy general manager at Mitsubishi UFJ Trust and Banking Corp., a member of Mitsubishi UFJ Financial Group Inc. The yen-based funds from the bank were listed on the Tokyo Stock Exchange on July 2.

Concern that Europe’s sovereign debt crisis would spread sent gold to a record high of $1,265.30 an ounce on June 21. Japanese individuals with combined financial assets of 1,453 trillion yen, as well as institutional investors, may shift some of their money into physical metals as a store of value, he said. Public debt in Japan amounts to $80,000 a person.

However, Japanese investors are more inclined to owning physical gold:

“Owning physical gold has become popular among individual investors,” said Paul Yamamura, a Tokyo-based trader with Sumitomo Corp. “It appears difficult though for demand to grow at that pace because it will take time for people to take a serious look at the market. Traditionally, people don’t like to invest in commodities in Japan.”

That's what Mitsubishi hopes to change. Because of that inclination, the firm's gold ETF has looser redemption privileges than either GLD or Sprott's Physical Gold Trust. Redemptions start at the 1 kg level.