Few may know that Kyoto is considered the birthplace of Japan’s precious metals refining. It wasn’t until the 15th century that Japan became one of the world’s top producers of gold and silver, with the Sado Gold Mine and the Iwami Silver Mine at the centre. Yet, due to limited technology, gold and silver couldn’t be extracted from copper ores; instead, the crude copper containing these precious metals was exported, at the price of copper.
This changed in the early 17th century, Edo period, when Riemon Soga developed Nanban-buki, a Western-style smelting method learned from Europeans. He launched a refining business in Kyoto under the name ‘Izumiya’ and partnered with his brother-in-law, Masatomo Sumitomo, who ran a bookstore and pharmacy in Kyoto. Together, they expanded copper refining, and Sumitomo later moved operations to Osaka. By the mid-Edo period, Sumitomo was refining about one-third of Japan’s copper. In 1690, the company opened the Besshi Copper Mine in Niihama, Ehime Prefecture in Shikoku, laying the foundation for what would become the Sumitomo business group.
Fast forward to 1971, when the US suspended the dollar’s convertibility to gold, triggering a surge in gold prices. Geopolitical shocks – Middle East wars, oil crises, the Iranian Revolution and the Soviet invasion of Afghanistan – pushed the price of gold to over $800/oz in early 1980. Japan liberalised gold imports in 1973 and exports in 1978. With rapid economic growth and asset diversification, retail sales of gold bullion were deregulated, sparking Japan’s first gold investment boom. Trading houses imported large volumes of gold as consignment stock from London and Zurich.
Sumitomo Corporation was Japan’s first mover to engage in the gold trading business, with the establishment of the Precious Metals Department in January 1980. I was assigned to run the gold trading book as a junior trader, sitting next to the seniors. As a young university graduate, I had no clue as to what trading was all about. Little could I have imagined that I would be in the metals markets for the next 30 years! In 1982, the Ministry of International Trade and Industry
(later METI) established the Tokyo Gold Futures Exchange (later TOCOM). This led to the spontaneous emergence of the Loco Tokyo gold market for wholesale bullion trading. Previously, Hong Kong had been Asia’s gold hub, but TOCOM’s rise and the gold boom shifted the centre to Tokyo. In 1986, Japan imported over 600 tons of gold for commemorative coins marking Emperor Showa’s 60th year on the throne. This was perhaps the peak of Japan’s presence in the global gold market.
Geopolitical shocks – Middle East wars, oil crises, the Iranian Revolution and the Soviet invasion of Afghanistan – pushed the price of gold to over $800/oz in early 1980.
However, the 1990s brought economic collapse. Gold imports fell from 302 tons in 1990 to just 72 tons by 2000. The launch of the euro and European Central Bank gold sales depressed dollar gold prices, while a strong yen pushed domestic prices to under ¥900/gram – a 50-year low.
In the 2000s, the rise of the BRIC economies and gold miners unwinding hedges triggered a resource boom. Japanese investors embraced gold via accumulation plans and ETFs. TOCOM’s gold futures open interest hit 500,000 contracts (500 tons) by 2005, marking a second gold boom. But after the 2008 financial crisis, Japan shifted from net importer to net exporter of gold.
Much of the gold hoarded since the 1978 liberalisation began to flow back into the market. China, meanwhile, rose to prominence. In 2002, the Shanghai Gold Exchange (SGE) was launched under the People’s Bank of China to centralise domestic trading and encourage public gold ownership. With restrictions on foreign currency purchases, gold became a hedge against yuan depreciation. China has pursued gold accumulation as a national strategy — both through official reserves and private holdings.
In the 2020s, global instability – from COVID-19 to Russia’s invasion of Ukraine and tensions over Taiwan – fuelled further price increases. In July 2025, the gold retail price hit a record ¥17,875/gram, driven by a weak yen and strong dollar.
From a Japanese perspective, it’s clear that the country no longer influences global gold pricing. Japan is no longer a big importer of gold bullion and is instead a net exporter of over 100 tons. TOCOM’s open interest has diminished to 50,000 contracts (50 tons), 1/10 of its peak 20 years ago. Yet, the legacy of gold investment remains deep. It is estimated that nearly 100 tons of gold are hoarded through accumulation plans alone, and when ETFs are included, Japan remains one of Asia’s largest gold-holding nations. Japan also continues to refine its craftsmanship in gold product manufacturing, maintaining a reputation for exceptional quality.
While it cannot match China’s state-driven strategy, Japan continues to shine as Zipangu — a land of gold with enduring presence.
While it cannot match China’s state-driven strategy, Japan continues to shine as Zipangu — a land of gold with enduring presence.
