Japan Signals The End-Game For The U.S.

Investment Research Dynamics

On a side-note, it’s important to know that late July/early August is seasonally the most quiet part of the year for the biggest eastern hemisphere gold accumulators. And we’re going into the “roll” period, when the bulk of the massive blob of August paper gold “rolls” into December, the next “front month” for Comex Paper gold. Having said that, China has actually slightly increased its gold imports this month. India has been in hibernation since March 1 but it’s biggest seasonal buying period starts in about four weeks. Unless smuggled gold into India is significantly greater in volume than anyone understands, India’s demand will be somewhat price inelastic and its elephantine appetite for gold will have a big impact on the price of gold.

This leads us to Japan. Curiously, Japan announced announced last week that its TOCOMcommodity exchange (Japan’s less corrupted CME-equivalent) would begin trading physical gold – like the Shanghai Gold Exchange – on July 25th – TOCOM Physical Gold.  It also announced that it would be introducing a delivery-at-settlement option for its current-month gold futures contract. That is, TOCOM gold futures buyers will now have the ability to take delivery of physical gold via TOCOM’s paper gold.

The news of this event was largely muted in the western financial media and even the alternative media blogosphere largely seems to have overlooked the news release. But this is a highly significant development because it signals a subtle shift in Japan’s economic and monetary focus from west to east.  It will also create an big upward price-readjustment in gold and silver.

The significance of Japan’s TOCOM exchange shifting from all fiat paper contracts to a physical gold trading and settlement operation is reinforced by the fact that two days ahead of the announcement it was reported that Tanaka Kikinzoku Group – Japan’s leading precious metals trader, refiner and manufacturer – acquired Swiss-based Metalor Group, one of the world’s largest refiners and supplier of precious metals-related products – Tanaka Buys Metalor.   Furthermore, in March 2015, Japan’s Asahi Holdings – a collector and refiner of precious metals – closed its acquisition of Johnson Matthey’s gold and silver refining business.  JM is one of the leading producers of refined precious metals products, including LBMA-quality 400 oz gold bars.

Now that Asia and Russia are no longer funding the U.S. Treasury debt printing press, the Fed will be forced to begin hyperinflating the money supply to keep the Government funded.  This fact is underscored by the Cleveland Fed President’s – Loretta Mester, a voting member of the FOMC –  recent comment about “helicopter money.”

While the Japanese continue to endorse the U.S. Government’s  use of the yen as a de facto printing press which enables the Fed to manipulate the U.S. stock market and to fund U.S. Treasury’s unrestricted  issuance of debt, they see the proverbial writing on the wall for the western monetary and financial system.  Japan has been quietly pivoting economically toward China for a couple years.

This abrupt transition into the physical precious metals market signals Japan’s move to integrate its financial markets and economic system into the developing eastern bloc monetary system, which appears as if it might eventually be seeded in gold.  It likely signals the end-game for the United States.