If you want proof that this is working, all you have to do is look at the hedged Japan equity ETF, which aims to eliminate the currency moves out of the ETF. That is the WisdomTree Japan Hedged Equity (NYSEMKT: DXJ), and its shares are up almost 7% at $43.62 so far this Thursday, against a 52-week range of $30.07 to $44.29. The more traditional Japanese equity ETF is the iShares MSCI Japan Index (NYSEMKT: EWJ). Its shares are up 4% to $10.90, against a 52-week range of $8.64 to $10.90.
What is interesting is that the hedged ETF is making the assets under WisdomTree Investments Inc. (NASDAQ: WETF) go up and up, as this ETF has now risen to a massive percentage of the management firm’s assets under management.
More proof that Japan will be doing much more relative quantitative easing is that Japan’s yen printing and asset buying is roughly three-times that of the what Ben Bernanke and the Federal Reserve is doing in the United States. The reason that Japan’s $75 billion or so trumps the U.S. $80 billion or so each month is simple: Japan’s 2012 GDP projection by the CIA World Factbook was $4.617 trillion, under the purchasing power parity calculation, versus $15.66 trillion for the United States. In short, Japan is matching our version of quantitative easing dollar for dollar (or yen for yen), yet they are not even quite one-third of the U.S. in relative gross domestic product now.
Gold technically has gone back into positive territory, up $3.90 to $1,547.50, but the key SPDR Gold Shares (NYSEMKT: GLD) trust is still down 0.6% at $149.80, and the lower-fee ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL) is down 0.6% to $152.70.
Japan’s move is being put at roughly $1.4 trillion into the economy over just two years. If you think about how much that is, this is the equivalent of 30% of one year’s GDP taking place in just two years. Johannes Gutenberg would be so proud. Now Japan just has to figure out how to start having kids again so that it replaces its population in the future.
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