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Wheaton transfers silver production to new company, complicating takeover bid
By Jim Hawe
Dow Jones Newswires
Thursday, July 15, 2004
http://sg.biz.yahoo.com/040715/15/3lpm6.html
TOKYO -- Gold's safe-haven appeal may
become a little tarnished among
Japanese investors if a proposed merger
between two banking giants brings about
some needed stability to the nation's
financial sector.
Still, many industry insiders believe
Japanese investors won't be giving up
their gold any time soon as bullion
still offers other appealing qualities.
Wednesday, UFJ Holdings Inc. proposed
a merger with rival Mitsubishi Tokyo
Financial Group Inc. in a deal that
would create the world's largest
lender.
Such a move is seen by many as
signaling a close to Japan's banking
crisis as UFJ, the weakest of the
nation's four "mega-banks" would be
merging with the strongest of the
lot.
"Such a merger would likely reduce
the immediate need for safe-haven
assets arising from a possible
banking crisis," said Itsuo Toshima,
the Japan-Korea regional director
for the World Gold Council.
However, Toshima isn't expecting a
rush to sell gold as he sees the
banking problem as just one part
of a broader economic landscape
that has driven Japanese investors
to embrace the yellow metal.
"There are still two distinct
uncertainties hanging over the minds
of Japanese investors, namely a
possible collapse of the pension
system and an unprecedented level of
public debt, which now stands at
around 700 trillion yen," said the
council's Toshima.
A dealer of precious metals futures
with one of Japan's largest
commodities houses said he has yet
to see a shifting of funds out of
gold futures.
"There is no firm correlation
between commodity markets and stock
markets in Japan as there is in
other countries. They are just not
seen as alternative investment
instruments to Japanese investors,"
he said.
The dealer said investors holding
shares in Japanese mining stocks
may sell to buy banking shares if
the proposed UFJ-MTFG merger heats
up the banking sector, but a shift
from gold futures to bank shares
seems doubtful.
In fact, the benchmark June 2005
gold contract traded on the Tokyo
Commodity Exchange was up Y6/gram
at Y1,422/gram Thursday morning,
adding to Wednesday's Y4-gain.
The World Gold Council's Toshima
expects gold will remain an important
fixture in the portfolios of many
Japanese investors.
"Our latest research shows that the
No.1 reason cited for buying gold,
at 56 percent, is the fact that
'gold does not become a worthless
piece of paper', which confirms
that investors here still regard
gold as a good risk-management
tool," he said.
Toshima added signs that the
Japanese economy is working free
from its prolonged deflationary
spiral is another reason to hold
onto gold.
"In our survey, 'inflation hedge'
was sighted as the third most common
reason for buying gold," he said.
Spot gold was quoted at $404.50 a
troy ounce Thursday morning in Asia,
up from $404.15/oz late Wednesday.
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http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
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Ted Butler silver commentary archive:
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1-800-BUY-COIN
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