Gold Sales by Japanese Retailer Jump Before Tax Change

By Jae Hur and Ichiro Suzuki

Gold sales by Tanaka Kikinzoku Jewelry K.K., Japan’s biggest bullion retailer, increased fivefold in March as investors accelerated purchases before the nation’s consumption tax rises tomorrow. Sales at Tanaka’s seven directly-owned stores jumped 423 percent in the first 27 days of March, compared with the entire month a year earlier, the Tokyo-based company said in an e-mailed statement. Sales for the quarter through March 27 were 249 percent higher than the same three months in 2013, it said. Tanaka didn’t provide a yen value for sales. The tax changes to 8 percent from 5 percent amid efforts by Prime Minister Shinzo Abe’s government to address the nation’s swelling public debt and to stoke inflation. Gold’s value as a hedge against price rises, and its own decline this month, also spurred sales, according to Tanaka Kikinzoku, which is a unit of Tanaka Holdings Co.

“We’ve seen an increase in people who want to buy for the first time,” said Naoto Mizuki, general manager for the retailer’s marketing department. Gold in London has fallen 2.6 percent this month, trimming its advance this year to 7.5 percent. Bullion lost 28 percent last year, the most since 1981. Gold for immediate delivery in London fell 0.2 percent to $1,292.50 an ounce at 6:05 p.m. in Tokyo, according to Bloomberg generic pricing. The precious metal priced in yen fell 1.2 percent this month. Futures for delivery in February 2015 on the Tokyo Commodity Exchange rose 0.6 percent to close at 4,292 yen per gram ($1,293 an ounce) today.

First Purchase Yasuhiro Endo, a 59-year-old office worker in Tokyo, was among those buying gold bars for the first time this month. He paid about 800,000 yen ($7,779) for two 50-gram and three 20-gram gold bars from Tanaka’s store in Ginza, one of Tokyo’s luxury shopping districts. “Gold is a safer asset than stocks and currencies as it will not bring huge losses,” Endo said. Naoko Tateishi, a 59-year-old self-employed business woman in Tokyo, bought 100-grams of gold with money she raised selling some of her stock holdings. It was her first purchase in 10 years and came as she revised her investments in preparation for retirement, she said.

One-kilogram gold bars are arranged for a photograph at a Tanaka Kikinzoku Kogyo K.K. store in Tokyo.

Japan’s current-account and fiscal deficits boost the attraction of gold as a haven investment for Japanese households, which had combined savings totaling 874 trillion yen at the end of December, said Koichiro Kamei, managing director at independent research company Market Strategy Institute. Bullion demand in Japan jumped threefold in 2013, according to the World Gold Council. In January, Tanaka said that its bullion sales surged 63 percent to a five-year high in 2013, exceeding purchases for the first time since 2004. Tokuriki Honten Co., another gold retailer in Japan, said it has been importing bullion since October to meet an increase in demand from individual consumers, in addition to purchases from smelters and trading houses, said Masahiro Arai, general manager at the company.

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