What comes next is full-scale exit out of Japanese government bonds, Davies says, with most of that money going into gold.
“I’m not saying all that JGB money & savings is going to go into gold, but I can bet your bottom dollar a goodly amount of it, when people wake up and realise that Japanese rates of .9 in 10-years is not an attractive yield, then a goodly amount — let’s say half of that was to go into gold,” Davies says.
The gold rush would be enough to upend the gold market:
“Now if we were to see a move out of JGBs — and to put this in perspective there is 900 trillion yen worth of yen of JGBs understanding — if you were to convert that to gold at $1300 worth, that is 253,000 tons worth of gold. That is an unbelievable amount of gold.”
He’s talking about a 400% surge: “In reality I think it’d be better if gold just got revalued. Take it from 1,300 and revalue it at 7,000.“