Gold, Yen, Central Banks and the Endgame | SurlyTrader.
Japan is frantically trying to stop its deflationary trap and its immense debt burden. The population is aging and prospects look dire. On Halloween (great timing) the Bank of Japan threw the kitchen sink at the problem by announcing that they would increase their QE from ¥60-70 trillion, to ¥80 trillion ($700 B) and would increase its purchases of ETF and REIT’s. In addition, Japan’s $US1.2 trillion Government Pension Investment Fund will dramatically rebalance its portfolio away from bonds. These actions have depreciated the Yen versus the dollar by about 5% since the announcement and have created about an 8% jump in the Nikkei. If you extend the time period to the summer, the Yen is down about 13% while the Nikkei is up about 10%.
If you are a Japanese citizen, you have lost a significant amount of purchasing power unless you own a bunch of stocks (which they don’t). Going back to 2012, the loss is over 30%:
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