bank of japan to continue more money printing

Hey Fellas

Japan continues to be stuck in a deflation spiral where prices of goods and services continue to fall, prolonging their “lost decade” of economic growth.

The Japanese Central Bank last month stated that they now have a mandate to promote adequate inflation to ensure their economy begins to grow at a steady rate.

The problem with deflation is that if consumers and business know that by holding off on a purchase for 1-3 months because they know the price of the good or service will fall in that time, then this shrinks economic activity.

As more and more people follow the same decision making process, this exacerbates the slowdown and causes additional deflation and prolongs a recession.

The only way to break this cycle is to create inflation. The best way to do this is to print money, and print substantial amounts of it, continually!

The more money they print, the more it will flow throughout the global economy and the less value is placed on fiat currency! Where do investors go to during these times, Gold Bullion.

Take a look at the price of gold since we had our first (Quantitative Easing Program)nee money printing by Mr Bernanke in 2009.... It launched from $US800/Oz to $1800/Oz!

This increase in the price of gold has lifted profit margins for gold producers from $200/Oz in 2008 to over $1200/Oz today, as well as significantly increasing the value of a small cap explorer's Gold JORC Resource.

Check out the price of gold chart in the last 30 years.

Especially since late 2008 when the US Federal Reserve commenced their first round of quantitative easing......

We now have a situation where $US1.5+Trillion worth of Euros/Pounds and Yen has been printed around the world. Where will the price of gold lead to, once this latest round of Quantitative Easing finishes, and this massive amount of cash begins to flow in the global economy?

It may take 12-24 months before we begin to see signs of acceleration in global inflation, but Central Banks, Hedge Funds, Super Funds, Sovereign Funds and private investors will definitely be looking to protect their assets by accumulating gold bullion.

This is happening when gold production continues to fall, due to all the biggest gold mines being in operation for 10-40 years and their gold yields falling as they dig deeper into their deposits.

This is a magnificent time for a small cap gold explorer like IndoChine Mining to be completing their PFS, increasing their Indicated Gold Resource, announce a maiden Measured or Reserve Gold Resource and announce how they plan on building the Mt Kare Gold Mine!

When the price of the mineral ore that an explorer is drilling and increasing their JORC Resource, rises as it has in the last 3 years, then this makes the explorer's job of building a very profitable mine a lot easier.

When the explorer already has, after only being on the ASX for 15 months, a 2.1million ounce Gold JORC Resource and economic fundamental events in the global economy laying the ground work for even higher prices for this mineral, then the company and its shareholders are in an excellent position to profit from this situation.

IndoChine just needs to continue to achieve their targets of announcing their PFS Report in the next few weeks, release the first of their own drilling results duplicating the high grade drilling results and increasing market awareness of the company in coming weeks and months.

The scene is set for a very exciting time for IDC!

:)

Cheers Nectar

Japan remains stuck in deflation

March 2, 2012 - 11:22AM



Japan's core consumer prices fell year on year for the fourth consecutive month in January, suggesting mild deflation may persist this year as lacklustre wage growth curtails domestic demand.

Core consumer prices declined an annual 0.1 per cent, slightly less than the median estimate for a 0.2 per cent decline, and a narrower measure that excludes both food and energy also fell in a sign that the Bank of Japan faces a long campaign to pull the economy out of deflation.

The central bank surprised traders last month by easing monetary policy and setting an inflation goal of 1 per cent. Friday's consumer price data suggest the BOJ will have to stick with its ultra-easy monetary policy for several more years.

Advertisement: Story continues below

"Since the rise in crude oil prices is accelerating and Japan's electricity bills are set to go up in coming months, the consumer price trend may face upward pressure from here on," said Junko Nishioka, chief economist at RBS Securities in Tokyo.

"But this is not because of an economic recovery, so it has few implications for monetary policy. The focus is on how higher energy costs will hurt consumption."

The core consumer price index includes oil products but excludes volatile prices of fresh fruit, vegetables and seafood.

The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, fell 0.9 per cent in the year to January.

Core consumer prices in Tokyo, available a month before the nationwide data, declined 0.3 per cent in the year to February. That compares with the median estimate for a 0.4 per cent annual fall.

The seasonally adjusted unemployment rate rose to 4.6 per cent in January from a revised 4.5 per cent in December, against economists' median forecast of 4.5 per cent.

All household spending fell 2.3 per cent in January from a year earlier in price-adjusted real terms, bigger than the median estimate for a 0.8 per cent annual decline.

The BOJ eased monetary policy on February 14 with a 10 trillion yen ($118 billion) increase in government bond purchases and set an inflation goal of 1 per cent, signalling more aggressive efforts to end a prolonged spell of deflation.

The yen has eased to a nine-month low against the dollar after the BOJ's easing, going some way to soothing concerns that a strong currency could weigh on exports and delay Japan's economic recovery.


Read more: http://www.theage.com.au/business/world-business/japan-remains-stuck-in-deflation-20120302-1u6zc.html#ixzz1nw5Fdm00