Japan Outflow Of Gold Reaches Record

There was some hope expressed about the recent downgrade of Japanese government debt leading to newfound buying in gold there, but such hopes seem to be optimistic if the outflow numbers for last year are any guide. Reuters reports that the net outflow from Japan rose to a record high of 78 tonnes last year. There is a subtle indication of increasing interest in the declining momentum of gold sales, but that's all.

The net outflow of 78 tonnes in 2010 amounts to about a quarter of output at top miner China, or more than 2.5 percent of global mine supply, making resource-poor Japan a rare supplier to a key global commodity market....

Japan turned a net gold exporter in 2006 for the first time since the ministry began compiling the data in 1988, and 2010 marked the fifth straight year of net exports.

Japanese households rushed to sell their gold holdings when domestic retail prices hit their highest in nearly 30 years in the spring of last year and late in the year, pulled higher by the record peaks hit in global gold prices.

But industry officials noted a subtle change in household behaviour in late in 2010, when household selling of gold lacked the momentum seen earlier in the year.

The slower pace of gold selling reflected expectations for a further rally in international and domestic gold markets and a bullish market outlook for 2011, making them want to hold out for greater profits.

A straw survey of trading houses and other industry sources indicates that there will be more interest in gold this year, but only to the extent of slowing down net selling. No flip-over to net buying is expected.