Tokuriki Honten Co., the country's second-largest gold retailer, reported Tuesday that Japanese investors doubled their gold purchases this week from the week before.
And Reuters reported how 63-year-old Yujiro Yamashita traveled to Tokyo's Ginza district to buy gold for the first time in 20 years.
It's thanks to fears stemming from Japan's new monetary easing, known as "Abenomics."
If You're Worried About Gold Prices, You Need to Read This
When stocks fall by 20% or more from their peak, it's labeled as a "bear market."
With gold prices down 26% from their record close back in August 2011, the "yellow metal" has entered a bear market of its own.
It took an especially ugly day on Monday to get us to that point.
Two days ago, gold prices plunged as much as 9.7% - the biggest decline since 1980 - and continued a sell-off that saw the yellow metal fall by 4.7% last week, including a 4.1% drop on Friday.
The metal has now fallen 26% from its Aug. 22, 2011 settlement record of $1,888.70.
To get some expert insights on this sell-off, I telephoned Peter Krauth, our resident natural resources expert and editor of our Real Asset Returns research service. Peter based himself in Canada to be closer to the miners and natural-resources companies he covers for his subscribers.
I asked Peter for insights on the following three questions:
Investing in Gold: Here's What to Do Now
Gold prices tumbled $140.40, or 9.4%, to $1360.60 an ounce. This brought the two-day decline to $203.70, or 13%.
- The Federal Open Market Committee (FOMC) meeting minutes that came out last week suggested the central bank may start scaling back its monetary stimulus measures later this year, reducing inflationary pressures.
- Goldman Sachs Group Inc. (NYSE: GS) last week cut its 2013 average gold forecast, for the second time, to $1,545 from $1,610. Investors like to dump the metal after the release of bearish research.
- There have been rumors financially strapped Cyprus was selling 400 million euros of gold, 75% of its reserves to raise cash.
Gold prices ended the drastic two-day decline Tuesday, up nearly 2% to $1,387.40.
Keith Fitz-Gerald on What's Driving Down the Price of Gold
Investors want to know: What's driving down the price of gold - and how long will the plunge last?
Gold prices tumbled Monday by more than 9% - the biggest percentage drop in 30 years.
The yellow metal had fallen to just above $1,360 an ounce Monday afternoon.
Every Gold Coin Has Two Sides
Just as every coin has two sides, every data point that doesn't meet expectations usually has an upside somewhere.
For instance, although gold prices have fallen with the strengthening U.S. dollar, the yellow metal is appreciating in Japanese yen. So when negative news about the economy came out this week, along with the U.S. Labor Department reporting that the country added only 88,000 jobs in March, investors found reasons to be encouraged.
For one, the Federal Reserve is apt to maintain its stimulative easing course and keep interest rates low.
This Gold Prices Chart Points to a Looming 24% Jump
Despite a pullback in gold prices, hold on to your gold. In fact, look to buy more.
You see, thanks to record highs for the U.S. stock market, a notable shift from defensive assets to "risk-on" trades has occurred.
The yellow metal slumped 1.4% to $1,552.80 Wednesday marking a nine-month low. That's after gold prices slid below $1,600 an ounce in Q1 on hints of a global economic rebound. The slide prompted market participants to shed gold holdings.
It's "certainly understandable" for investors to have sold gold following a 400% appreciation over the last decade and move into stocks, said Malcolm Burne, chairman of the Golden Prospect Precious Metals investment trust.
But, here's why the tide may be about to turn.
What Maslow and Rand Would Tell Investors Today (And How It Relates To Gold)
I have always been fascinated by what motivates people. What motivates Tiger Woods to pursue the goal of being the world's greatest golfer?
What's the motivation driving Warren Buffett to continue purchasing companies instead of retiring in Tahiti?
Or how about the motivation behind the trucks allegedly packed with euros parked in front of the Central Bank in Nicosia?
What is most puzzling is the motivation driving investors to buy or sell their equity positions when research shows that holding an investment over the long-term is more successful than timing the market.
As Business Insider puts it, there's "proof that [investors] stink at investing." Its headline is catchy, and the chart shows the evidence, as the average investor has significantly underperformed oil, stocks, gold and bonds in the past 20 years. While, on average, investors returned 2 percent, oil, stocks and gold rose about 8 percent.
After inflation, the average Joe or Jill actually lost money.
Don't Shy Away from Investing in Gold
The most actively traded gold contract, for April delivery, rose $2.70, or 0.1%, to settle at $1,590.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
"The gold market is getting propped up by a break in the dollar index," Ira Epstein, director of the Ira Epstein division at the Linn Group, told The Wall Street Journal. "The problem is, people are not buying into the rally, they're buying it on the dips."
If gold prices cross the psychologically important $1,600-an-ounce level, confidence in investing in gold could strengthen.
Until then, it looks like investors will stay busy trying to profit from the record-high Dow.