Asset deflation coupled with consumer-price inflation is a powerful recipe for political discontent.
"We are still cautious on the potential future dilution from further prospective capital raises for the group as well as continued higher losses related to credit and asset deflation, " he added.
But if asset price inflation turns to asset price deflation first, bringing about recession, then goods and services inflation is pre-empted in the immediate cycle.
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The second and no doubt leading contributor to the gold bubble has been the world financial crisis of 2008-2009 and the subsequent worldwide central bank policy of monetary expansion to fight financial asset price deflation.
Useless for pretty much everything except storing wealth (its economic value is social, not industrial), gold acts as inflation-proof money when investors need it most right in the middle of an asset-price deflation.
With asset prices plummeting and economies shrinking, deflation will soon be a bigger worry.
The two current nominees are on record as favoring more aggressive monetary easing and BOJ asset purchases with the aim of defeating deflation and stimulating growth.
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Yet by holding interest rates low it may be fuelling an asset bubble, which when it bursts could make deflation even more likely since there is much less room for fiscal and monetary stimulus than after the bursting of the previous one.
On the other hand, inflation that is very low could indicate a coming bout of deflation, where a generalized dropped in wages and asset prices create a vicious cycle that can destroy an economy.
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That is exactly the kind of thinking and behavior the Japanese government and central bank intended to create by vowing to defeat deflation and reignite the economy through broad-based asset purchases known as quantitative easing.
The Bank of Japan allowed deflation to develop when it held policy too tight, partly because it was worried about another asset-price bubble.
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