This chart is highlighting what has happened to Japan’s markets since the beginning of the “Trump trade” era, around October of that year when it became clear Donald Trump would enter the White House. The white line represents Japanese equities and the golden line represents gold priced in Japanese Yen.
A Stark Divergence in Performance
From October 1st to April 4th (when this was recorded), Japanese stocks are down about 11%, while gold priced in Yen is up nearly 18%. This clear divergence demonstrates how, in the same currency and same market environment, gold has acted as an effective counterweight to local equity market losses.
Hedging Beyond US Dollar Thinking
This isn’t just about USD gold performance—it’s a reminder of how gold behaves in local terms. Whether it’s Japan, Turkey, Sri Lanka, or India, gold continues to show strength when local equities are under stress, particularly during periods of currency volatility or economic uncertainty.
Why Gold Is Portfolio Insurance
Even the best company analysis, research, or stock picking can’t insulate you from macro-level risks—especially currency devaluation or global geopolitical developments. When an external force like the US dollar exerts pressure, your domestic assets—equities, currency, economy—can be affected in ways beyond your control.
Gold as a Defense Against Currency Risk
Gold acts as a form of insurance for your portfolio against those uncontrollable variables. It doesn’t need to earn dividends or pay interest—it holds value across borders and reacts to systemic uncertainty. This case study with Japan is yet another illustration of why gold allocation makes sense in any portfolio.
On The Momentum Podcast this week
In Episode 2 of The Momentum Podcast, Rajnish, a seasoned investor from Pune, shares his shift from traditional investing to momentum strategies. He talks about avoiding costly mistakes, the real estate vs equity debate, and his approach to gold investing. A must-listen for young investors! Now streaming.
