“Does the collective know of an instrument that invests in gold in Yen? And your comment?”

Eoin Treacy's view Thank you for this question which others may also have an interest in. Thanks also for you participation at the New York venue for The Chart Seminar last month.

There are at least two Japanese listed gold ETFs denominated in Yen. The Mitsubishi UFJ Japan Physical Gold ETF appears similar to other physical gold ETFs. I do not know if there are any Yen denominated gold ETFs listed in the USA.

Depending on the size of one's account it may be possible to ask a broker to create a structure which allows you to take a position in gold and hedge it against the USD/JPY exchange rate. Alternatively one could buy the Gold SPDR (GLD) and short a commensurate amount of the CurrencyShares Japanese Yen Trust (FXY).

Gold in Japanese Yen has been largely rangebound since September and prices have fallen to test the lower side near ¥125000. While oversold in the short term a clear upward dynamic will be required to confirm a return of demand dominance in this area.

While gold mining shares have been particularly hard hit over the last six weeks, the total assets of various gold ETFs have been much steadier. The NYSE Arca Gold Bugs Index continues to extend its decline, having completed a Type-3 top, as taught at The Chart Seminar. It is oversold by any measure but a break in the short-term progression of lower rally highs, currently near 420, would be required to question the consistency of the decline.

Total Assets at Gold ETFs hit a peak near 77.4 million troy ounces in mid-March and while the trend of accumulation has lost momentum somewhat, it reflects continued investor interest in the sector. The chart also helps to illustrate just how important investment demand for gold has become. At 76 million troy ounces, ETFs represent among the largest holders of gold.

There are a number of potential conclusions one can draw from this chart. The first is that investor actions suggest more faith in gold tracking funds than gold miners for optionality on the gold price. The second is the trend supports the contention of the most bullish advocates of gold as an investment vehicle. However the third and most important point is that this large passive long position in gold represents a large pool of potential supply. The pattern of accumulation remains in a consistent uptrend and has found support in the region of the 200-day MA on successive occasions. However, when the trend of accumulation reverses it is likely to confirm an important medium-term to long-term reversal for the gold price.