AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
During the London trading session on Tuesday, the price of gold in U.S. dollars fell by $10 to $2153 per ounce. However, the price of gold in Japanese yen hit a historic high due to the Bank of Japan ending its 8-year-long policy of negative interest rates and other unconventional measures.
The Bank of Japan announced on Tuesday that it would raise its benchmark interest rate from -0.1% to 0-0.1%, in line with market expectations. This marks the first rate hike since 2007 and officially ends the 8-year era of negative interest rates, while maintaining a temporarily accommodative financial environment. Additionally, the Bank of Japan has also terminated its Yield Curve Control (YCC) policy and the purchases of Exchange-Traded Funds (ETFs) and Real Estate Investment Trusts (REITs).
During the past decade up to 2023, the price of gold in Japanese yen rose by over 140% amid the era of negative interest rates in Japan.
Simultaneously, Japan’s demand for gold jewelry totaled 161 tons, and the net inflow of physical gold ETF Trust Funds (TYO: 1540) in Japan was 23 tons. However, Japanese households were net sellers, disposing of 3 tons of small gold bars and coins.
Both the yen and gold are currently considered safe-haven assets, exhibiting positive correlation in specific circumstances. Gold is seen as a “safe-haven opportunity” during currency system collapses, while the yen is favored by investors due to its long-term low interest rates and economic position. After the Bank of Japan’s decision to end the last negative interest rate policy in the world on Tuesday while temporarily maintaining an accommodative financial environment, the yen exchange rate dropped below the key level of 150 yen per US dollar.
The currency policy adjustment by the Bank of Japan may cause fluctuations in the yen exchange rate, directly impacting the demand for and investment in gold. If the yen depreciates, it could stimulate the demand for safe-haven assets such as gold, thereby driving up the price of gold.
In addition to the Bank of Japan, Japan’s Government Pension Investment Fund (GPIF), which is also the world’s largest pension fund, revealed important news on Tuesday that it is exploring investments in “low liquidity assets,” including Bitcoin, forestry, and gold. As of the end of 2023, the fund’s investment portfolio amounted to $1.5 trillion, with 25% allocated to both domestic and foreign bonds and stocks. The GPIF yielded 12.0% in yen terms last year, but only 4.1% in dollar terms.
Since 2000, the GPIF’s assets have grown by 143% in yen terms, while the price of gold in Japanese yen has surged by 881% over the same period.
