BLOOMBERG
Tuesday, Mar 24, 2009, Page 11

Young Japanese retail investors are turning to gold purchasing plans at an unprecedented rate as they seek to protect their finances amid a deepening recession, an official at the nation’s largest bullion retailer said.

“We’ve never seen anything like this,” said Noriyuki Abe, an executive at the precious metals division of Tanaka Kikinzoku Kogyo KK.

The company has signed up more than 4,000 customers a month for its gold accumulation plan since October. Previously “the tally wouldn’t exceed 1,000,” he said in an interview.

Financial turmoil has boosted bullion demand worldwide, increasing sales of Austrian Philharmonic gold coins and driving holdings to all-time highs in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal. Rising interest in long-term investment plans by customers in Japan aged from 20 to 40 “stood out,” Abe said.

“A slow-and-steady approach to investing is in line with the values of Japanese young people, who emphasize stability in their lives,” said Koichiro Kamei, managing director of Tokyo-based Market Strategy Institute Inc.

Tanaka Kikinzoku’s gold accumulation program, which started in 1988, allows customers to have as little as ￥3,000 (US$31) a month debited from their bank accounts, with many choosing deductions of ￥10,000.

The amount is set in advance, evening out the investment risk over time. The gold is stored by the company on behalf of the investors.

The number of deposits gained by 60,000 in the past year to about 350,000, Tanaka Kikinzoku said.

Almost 40 percent of customers are in their twenties and thirties compared with “extremely low” levels about three years ago, Abe said yesterday.

Viewed by some investors as a haven when asset values drop, gold prices rose to an 11-month high of US$1,006.29 an ounce on Feb. 20 as the global economic slump deepened.

Mitsubishi Materials Corp, Japan’s third-largest copper producer and a bullion dealer, has opened 33 percent more personal gold accumulation accounts in the half-year since September, said Kouichi Saito, a bullion trading group manager.

“We didn’t think we would see such an increase in accounts because we had assumed that the market was saturated, with those 50 or older being the main customers interested,” Saito said.